Given the size of the fund, the macroeconomic effects of possible changes in the GPIF‘s investment strategy should also be carefully evaluated.
The GPIF should consider whether the long-term performance goal of the fund may be better attained – while improving the fund‘s diversification – by allocating a small amount of funds towards long-term, less liquid instruments, including foreign ones.
The current ceiling set by the investment committee on investment in foreign securities (the portfolio invested in foreign bonds must be less than the portfolio invested in foreign equities which in turn must be less than the portfolio invested in domestic equities) should be justified on financial grounds taking into the account the fund‘s performance target.
The investment policy should consider the fund‘s potential impact on the domestic economy and financial stability and it should integrate environmental, social and corporate governance (ESG) factors. The GPIF could become a signatory of the UN Principles of Responsible Investing.