Japan and Korea's institutional capital, explained

Written 3 September 2026 · All explainers

How to read the markers. [D] — verified from a source retrieved for this note, listed under Sources. [I] — industry-understood; not formally disclosed by a named party. [S] — our own inference or judgment. Every figure is either sourced or marked as an estimate.

The short version

A fund manager arriving in Tokyo or Seoul meets a dozen kinds of institution, and each one buys a fund by a different route. This note is the map: who the pools are, how big they are, what they are allowed to hold, and who sits between a manager and the cheque.

Japan’s money is very large and mostly held in a small number of places — the public pension reserve (about ¥300 trillion), the post office’s bank and insurer (about ¥280 trillion between them), the four big life insurers (about ¥230 trillion), and the corporate pension sector (about ¥69 trillion). Almost all of it reaches an outside fund through a trust bank, which holds the legal title, and often through a gatekeeper, which does the selection. Korea’s money is more concentrated still — the National Pension Service alone holds about ₩1,866 trillion — and it is awarded in the open, through public requests for proposals with posted criteria, on a calendar-year plan that a government committee approves each spring.

The single most useful thing to know is that neither country’s institutions buy a fund directly from the manager: in Japan a trust bank and usually a gatekeeper stand between you and the pension; in Korea a public tender and usually a local feeder fund do. The rest of this note explains how each of those intermediaries works, when the decisions are made, and what documents they add. [S — the framing; the mechanisms below are sourced]

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1. Japan’s pools: who holds the money

All figures are from each institution’s own latest disclosure, fiscal year stated. Japan’s fiscal year runs April to March, so “FY2025” ends on 31 March 2026. US dollar figures use the Federal Reserve’s rate of ¥159.97 per dollar on 28 August 2026. [D — see Sources]

GPIF is the reserve of Japan’s national pension, and the largest pension pool in the world. Its policy is set in a basic portfolio (the long-run target mix) for each five-year “medium-term objectives period”. The fifth period began on 1 April 2025 and keeps the split at 25% each for domestic bonds, foreign bonds, domestic equities and foreign equities, with tolerance bands of ±6, ±5, ±6 and ±6 points respectively, and ±9 points for bonds and equities as a whole. Alternative assets (infrastructure, private equity, real estate) are not a separate class: each fund is filed under one of the four classes by its risk profile, and the total is capped at 5% of the portfolio. At end-FY2025 alternatives stood at 1.74%, so the cap is far from binding. FY2025 returned 16.47%, a gain of ¥41.4 trillion. [D — GPIF]

Two design choices explain how GPIF buys. It is required to outsource: more than 90% of its assets sit with external managers, and it describes itself as “a large fund of funds”. For alternatives it runs a manager registration system under which a fund-of-funds manager must be registered under Japan’s Financial Instruments and Exchange Act (FIEA) — or partner with a registered gatekeeper — to be eligible for a GPIF agreement. Registration triggers no timetable; GPIF says “the starting time of manager selection process is not determined”. [D — JSRI summary; GPIF registration page]

The three mutual-aid pensions (KKR for national civil servants, Chikyoren for local government staff, and the private-school scheme) follow the same 25/25/25/25 model portfolio and, like GPIF, delegate their alternatives to external managers. [D — Cabinet Secretariat papers, Mar 2024; the private-school scheme’s size was not retrieved]

Japan Post Bank and Japan Post Insurance are the post office’s two balance sheets. The bank holds ¥223.0 trillion against about ¥186 trillion of deposits, and reports ¥109.0 trillion of “risk assets” — everything other than yen interest-rate holdings — which include private equity and real estate funds. The insurer holds ¥58.4 trillion, of which ¥12.9 trillion (22.1%) is classed as “return-seeking”. [D]

The four big life insurers together hold about ¥230 trillion on the bases in the table. Nippon Life reports 30.0% of its general account in foreign-currency assets. Their asset plans are set each half-year and briefed to the press: in October 2025 Nippon Life, Dai-ichi Life and Meiji Yasuda described plans “for the second half of the fiscal year through March 2026”. [D — Nippon Life; Reuters via WYVN]

Corporate pensions are the long tail: ¥68.8 trillion across 11,653 defined-benefit plans. Each is small, and each is required by law to invest only through one of four routes — a trust with a trust bank, a life-insurance general or separate account, a discretionary mandate with a licensed manager, or (for fund-type plans only) in-house. That rule is the reason the trust bank appears in section 3. [D — Pension Fund Association]

The banks are large but are lenders first: the 61 regional banks hold ¥342.6 trillion of deposits and ¥79.3 trillion of securities. They buy funds with their securities books, not with an allocation model, and the megabanks act at least as often as arrangers and distributors as they do as investors. [D for the figures; I for the behaviour]

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2. Korea’s pools

Korea runs on the calendar year. Won figures use the Federal Reserve’s ₩1,379.41 per dollar on 28 August 2026. [D — see Sources]

NPS is the whole story in scale. Its fund reached ₩1,865.6 trillion at end-June 2026, allocated 35.4% to global equity, 29.1% to domestic equity, 15.4% to domestic bonds, 5.9% to global bonds and 14.0% to alternatives; 54.1% of the fund is now invested outside Korea. The 2026 target allocation is 20.8% domestic equity, 34.7% global equity, 23.1% domestic bonds, 7.4% global bonds and 14.0% alternatives. The mid-term plan running to 2031 points to roughly 55% equity, 30% fixed income and 15% alternatives. [D — NPS]

Those targets are set by the National Pension Fund Management Committee, a body under the Ministry of Health and Welfare. It resolves the five-year targets “by the end of May each year” and can revise the current year in between: in January 2026 it met unusually early to trim the overseas-equity target because of the cost of buying foreign currency, and on 28 May 2026 it raised the domestic-equity target from 14.9% to 20.8% through 2027, so that a boom in Korean shares would not force about $100 billion of sales. Rebalancing works through two bands: a strategic tolerance of ±3 percentage points around each target, plus a tactical band of ±2 points. [D — Seoul Economic Daily; JoongAng Daily; KED Global]

KIC manages foreign reserves and public funds entrusted by the government and central bank, held entirely overseas. Korea Post runs two separate pools — postal savings and postal insurance — each of which tenders on its own. KTCU, POBA, the Teachers’ Pension, MMAA and Yellow Umbrella are the mutual-aid and occupational funds: small next to NPS, but heavy users of overseas alternatives (POBA puts more than 70% of its assets there) and the most frequent issuers of open tenders. [D for figures; I for the characterisation]

Korea’s public fund-of-funds matter for venture managers. KVIC (Korea Venture Investment Corp) runs the Korea Fund of Funds; its global programme has backed 74 overseas venture funds with ₩7.43 trillion of total fund size since 2013, on the condition that each manager invests at least the fund-of-funds’ commitment back into Korean companies. [D — Asia Business Daily]

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3. How a mandate is awarded in Japan: the trust bank is a party to every closing

Start with the law. A Japanese corporate pension may only hold its assets in one of four ways: a trust with a trust company, a life-insurance contract, a discretionary investment agreement (投資一任契約) with a licensed manager, or in-house management, which contract-type plans may not use at all. [D — Pension Fund Association]

The third route is the one an outside fund manager cares about, and it does not remove the trust bank. When a plan appoints a discretionary manager, the assets must still be placed in a specified money trust (年金特定信託, often shortened to 年金特金) with a trust bank. The manager gives the investment instructions; the trust bank settles the trades, receives the income, holds the securities and keeps the books. In the plain pension-trust route (年金信託) the trust bank does both jobs — it invests and it holds. [D — Pension Fund Association Q&A]

Either way, the trust bank holds the assets in the trust’s own name, which is what protects them if the sponsoring company fails: a creditor of the employer cannot seize money the employer has already placed in trust. The four large trust banks — Mitsubishi UFJ Trust, Sumitomo Mitsui Trust, Mizuho Trust and Resona — also do the pension’s administration, actuarial calculations and benefit payments, so they are the plan’s operating back office as much as its custodian. [D — MUFG Trust glossary; Trust Companies Association]

The consequence for a fund manager is mechanical. The investor of record in a limited-partnership fund is not the pension but the trust bank as trustee, so the trust bank reviews and signs the subscription documents, runs its own operational review of the fund’s administrator, valuation and reporting, and needs reporting it can book. That adds a second reviewer to every closing and a second set of questions — about cash-flow notices, capital-account statements, audited accounts and Japanese-language summaries — that arrive after the investment decision has been made. [I — industry-understood; no single disclosing party]

Above the trust bank sits the selector. Large pensions and GPIF use gatekeepers — third-party managers that pick and monitor funds on the pension’s behalf — and consultants for due diligence. GPIF named Towers Watson and Russell Investments Japan in that role when it began alternatives in 2017, and its registration rules still require a fund-of-funds manager without Japanese FIEA registration to partner with a registered gatekeeper. Smaller corporate plans lean on the trust bank’s own product shelf and on consultants. [D — IPE 2017; GPIF registration page; I for the corporate-plan practice]

So the Japanese chain has four links: the sponsor’s investment committee decides the allocation; a gatekeeper or consultant selects the fund; a trust bank holds the interest and reviews the operations; then the manager. The money moves last.

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4. How a mandate is awarded in Korea: the plan, the tender, and the feeder

Korea’s chain is public where Japan’s is private. Three mechanisms do the work.

First, the plan. Every public body sets an annual fund-management plan, and NPS’s is approved by the Fund Management Committee described in section 2, with the five-year targets resolved by the end of May. The plan fixes how much can go to each asset class in the year; the investment office then works out how many managers it needs to hire to get there. [D — Seoul Economic Daily; I for the link from plan to hiring]

Second, the tender. Public institutions choose managers through an open request for proposals (공모), posted on their own sites and covered in the English press. The postings are specific. Korea Post’s savings bureau in August 2026 sought “one or two offshore infrastructure equity funds” for up to $100 million, mid-cap, with its commitment capped at 10% of the fund’s total committed capital; its insurance bureau in May 2026 sought unlevered infrastructure debt in developed markets, closed-end and blind-pool, for up to $150 million. NPS in March 2026 tendered for up to seven global alternative-investment advisers on four-year contracts, and in August 2026 added a local-presence requirement for external managers. [D — KED Global]

Tenders come with a clock. Korea Post posted a venture mandate on 30 July 2026, closed applications on 13 August, and will appoint by year-end; the Teachers’ Pension gave brokerages eleven days in October 2025. And they come with a size test: when KTCU committed ₩700 billion to ten domestic private-equity managers in May 2025, each manager had to raise at least ₩200 billion within nine months so that KTCU’s money was never more than 25% of any fund. [D — Asia Asset Management; KED Global]

Third, the feeder. Under Korea’s Financial Investment Services and Capital Markets Act, marketing a private fund to Korean investors is a licensed activity: it must be done by a licensed local manager or through a licensed domestic distributor such as a bank or securities firm. The common workaround is a Korean feeder fund — an investment trust set up by a locally licensed asset-management company whose only asset is the offshore fund. A manager marketing to the feeder needs no local broker; the feeder’s manager becomes the fund’s investor of record, handles subscription documents, know-your-customer checks, foreign-exchange filings and currency hedging. More than half of Korean investors, institutions included, prefer this route, and insurers often prefer a note feeder — a vehicle issuing a mix of notes and LP interests — because it lowers the capital they must hold against the position. [D — Chambers 2026; Preqin 2022]

That is why Korean securities firms and asset managers appear twice on a Korean deal: as the local “GP of record” for the feeder that institutions buy, and separately as distributors selling the same strategy to their own retail and high-net-worth clients. They are two businesses with two sets of questions, and section 6 returns to that.

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5. The calendar: when the money is decided

The practical reading: Japanese decisions cluster around 1 April and 1 October, because that is when plans and budgets reset; Korean decisions cluster in the second and third quarters, after the spring committee season and before the year-end appointments. A manager who arrives in Tokyo in February or in Seoul in November has usually missed the year. [S]

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6. What this means in practice for a fund manager

Time. Twelve to twenty-four months from first meeting to first capital call is the industry’s working assumption for a new manager in either market. [I] The Korean tender itself is quick; the year of relationship-building before an institution invites you to bid is not.

Documents that decide it. In Japan, three items sit outside the usual data room: a Japanese-language summary of the fund and its terms, because the committee papers are in Japanese; the trust bank’s operational review, which can stall a closing the investment committee has already approved; and look-through reporting for insurers, which must classify each holding for solvency and accounting purposes. In Korea the equivalents are the tender’s stated criteria — fund size relative to the commitment, track record and the manager’s own commitment — and the feeder’s paperwork. [I for the Japanese list; D for the Korean criteria cited above]

Two audiences, two decks. Institutional investors and distributors (販売会社 — the securities firms and banks that sell products to their own clients) are different readers. The institution asks about your process, track record and terms and is bound by an allocation plan. The distributor asks about product structure, liquidity, fees it can share and whether the product suits its clients, and is bound by suitability rules. The same firm can be both, but never in the same meeting, and a deck written for one reads as evasive to the other. [S]

Neutrality. Nothing above says which pool a manager should approach. It says what each pool is, how it decides, and who must sign before it can pay.

Caveats

• Sizes are point-in-time and mixed-basis. GPIF’s ¥299.8 trillion is the whole reserve; about ¥6.2 trillion of it sits in the government’s pension special account, and the figure “under GPIF management” is therefore closer to ¥293.6 trillion, which is our arithmetic on GPIF’s note [S]. Meiji Yasuda’s figure is consolidated (it includes overseas subsidiaries); Nippon Life’s, Dai-ichi Life’s and Sumitomo Life’s are the domestic company. KKR and Chikyoren are three years old. Norinchukin, the private-school mutual aid, SMBC Group, MUFG, Samsung Life, Hanwha Life and Kyobo Life were named in the brief but their sizes could not be retrieved from a source that loaded; they are named without figures.
• Regional-bank deposits are a measure of size, not of an investment pool; only ¥79.3 trillion of securities is invested.
• The NPS 2026 target allocation has been revised twice this year; the figures in section 2 are those on the NPS fund site at retrieval. KED Global’s headline gives the Teachers’ Pension 2025 return as 18.9% and its text as 19.8%; Asia Asset Management says 18.9%, which is used here.
• Currency conversions use one day’s Federal Reserve rate and are for scale only.
• The Korean feeder-fund description rests on a 2022 Preqin note and the 2026 Chambers guide; the FSC’s own English rules were not retrieved. The Japanese trust-bank closing mechanics, the 12–24-month timeline and the two-audience rule are industry-understood [I] or our inference [S], not disclosed by any party.
• Yellow Umbrella’s size is a press projection for 2027, not a current figure. POBA’s ₩30 trillion is from May 2025.

Sources [D]

All retrieved and confirmed to load on 3 September 2026.

Exchange rates

• Federal Reserve H.10 — Japanese yen historical rates — ¥159.97 per dollar on 28 August 2026.
• Federal Reserve H.10 — South Korean won historical rates — ₩1,379.41 per dollar on 28 August 2026.

Japan — public pensions

• GPIF, Investment results for fiscal 2025 (summary) — ¥299,825.4 billion at market value at 31 March 2026; 16.47% return, ¥41,399.5 billion gain; alternatives 1.74% within a 5% maximum; about ¥6.2 trillion in the pension special account.
• GPIF, 基本ポートフォリオ (Japanese) — 25/25/25/25 from 1 April 2025; tolerance bands ±6/±5/±6/±6 and ±9; alternatives capped at 5% and managed within the four classes.
• GPIF, Policy asset mix for the Fifth Medium-Term Objectives Period — details — the same in English; effective 1 April 2025.
• GPIF, Manager Registration System (alternative assets) — FIEA registration or a registered gatekeeper required for fund-of-funds mandates; no fixed selection timetable.
• JSRI, GPIF Executive Office Investment Status and Challenges (summary), July 2025 — GPIF outsources over 90%; ¥4.2 trillion invested and ¥7.4 trillion committed to alternatives at 31 March 2025 (1.6%).
• IPE Real Assets, “Japan’s GPIF to hire gatekeepers before looking at co-investments, funds”, April 2017 — Towers Watson and Russell Investments Japan appointed for due diligence.
• Cabinet Secretariat, KKR積立金の管理運用 (Ministry of Finance paper, 26 March 2024) — reserve ¥8,363.7 billion at end-FY2022; alternatives delegated to external managers.
• Cabinet Secretariat, 地共済の積立金の管理運用 (Ministry of Internal Affairs paper, 26 March 2024) — reserve ¥24,953.2 billion at end-FY2022; basic portfolio 25% each.

Japan — post, insurers, banks, corporate pensions

• Japan Post Bank, Investor information — ¥223.0 trillion total assets, about ¥186 trillion deposits, ¥109.0 trillion risk assets including private-equity and real-estate funds, at 31 March 2026.
• Japan Post Insurance, 2026年3月期 決算の概要 — total assets ¥58.4 trillion; return-seeking assets ¥12.9 trillion (22.1%).
• Japan Post Holdings, Consolidated financial results for the fiscal year ended 31 March 2026 — group total assets ¥289,864,524 million (context only).
• Nippon Life, Financial results for the fiscal year ended 31 March 2026 — total assets ¥85,831,839 million non-consolidated; general-account foreign-currency assets 30.0%.
• Meiji Yasuda Life, 2025年度決算（案）説明資料, 26 May 2026 — consolidated total assets ¥590,985 hundred million.
• Sumitomo Life, investor presentation, 10 July 2026 — total assets ¥51,577.4 hundred million for the year to March 2026.
• Dai-ichi Life, Financial results for the fiscal year ended 31 March 2026 — non-consolidated total assets ¥35,185,307 million.
• Reuters via WYVN, “Japan’s major life insurers plan to trim yen bond holdings in Oct–March”, 29 October 2025 — the half-year investment-plan briefings.
• Mizuho Financial Group, Consolidated financial statements for fiscal 2025 — consolidated total assets ¥302,240.0 billion at 31 March 2026.
• Regional Banks Association of Japan, 地方銀行の概要 — 61 members; deposits ¥342.6 trillion, loans ¥279.9 trillion, securities ¥79.3 trillion at 31 March 2026.
• JP Actuary Consulting, 2025年3月末の企業年金の受託概況, June 2025 — relaying the Trust Companies Association, Life Insurance Association and JA figures: DB assets ¥68.8 trillion, 11,653 plans, 8.87 million members.

Japan — the trust-bank mechanism

• Pension Fund Association, 年金資産の運用方法について — the four permitted routes; a discretionary mandate must be paired with a specified pension trust at a trust bank; contract-type plans may not manage in-house.
• Pension Fund Association glossary, 年金信託（契約） — the fund as settlor and beneficiary, the trust company as trustee.
• Mitsubishi UFJ Trust glossary, 年金信託契約 — assets held in the trust’s name, separated from the trustee’s own property.
• Trust Companies Association of Japan, 年金信託 — trust banks’ administration, actuarial and benefit-payment roles; protection from the employer’s creditors.

Korea — pools

• NPS Investment Management, fund overview — ₩1,865.6 trillion at end-June 2026; current allocation; 2026 targets; mid-term plan to 2031; global share 54.1%.
• KED Global, “NPS raises 2026–2027 domestic equity cap, widens strategic allocation band”, 28 May 2026 — 14.9% to 20.8% through 2027; ±3-point strategic and ±2-point tactical bands.
• Seoul Economic Daily, “National Pension Service begins deliberations on mid-term asset allocation”, 15 May 2026 — the committee resolves five-year targets by the end of May each year.
• Korea JoongAng Daily, “Korea’s pension service to boost domestic stock investments…”, 26 January 2026 — ₩1,454 trillion at end-2025; the unusually early January meeting and its revisions.
• KIC, 2025 Annual Report — $232.0 billion at end-2025; 13.91% return.
• Asia Asset Management, “Korea wealth fund KIC’s assets hit record US$232 billion”, 25 February 2026 — alternatives 21.9%.
• Asia Asset Management, “Korea Post opens tender for 60 billion won venture capital fund mandate”, 2026 — about ₩150 trillion under management; RFP 30 July, deadline 13 August, appointment by year-end.
• KED Global, “Korean Teachers’ Credit Union’s assets reach $56.6 bn…”, 30 March 2026 — $56.6 billion; 11% return in 2025.
• KED Global, “POBA bullish on REITs, real estate debts and senior housing”, 22 May 2025 — ₩30 trillion; more than 70% in alternatives.
• KED Global, “Korea Teachers’ Pension posts record 18.9% return in 2025”, 5 February 2026 and Asia Asset Management, 9 February 2026 — ₩29.73 trillion at end-2025.
• Seoul Economic Daily, 군인공제회 총자산 24조 돌파, 30 March 2026 — ₩24,463.5 billion at end-2025.
• Sidae, ‘35조’ 노란우산…, 9 June 2026 — Yellow Umbrella projected to exceed ₩35 trillion by end-2027.
• Asia Business Daily, “Korea Venture Investment Corp. announces 2025 second-half global fund investment programme”, 20 August 2025 — 74 funds, ₩7.43 trillion since 2013; matched-investment condition.

Korea — tenders and market access

• KED Global, “NPS invites bids for alternative investment advisory”, 26 March 2026 — up to seven advisers, four-year contracts.
• KED Global, “NPS to expand ESG rules to private equity, real estate, infrastructure”, 21 August 2026 — local-presence requirement for external managers.
• KED Global, “Korea Post seeks offshore infrastructure funds”, 24 August 2026 — $100 million or €100 million; commitment capped at 10% of fund; mid-cap.
• KED Global, “Korea Post seeks offshore infrastructure debt managers”, 27 May 2026 — $150 million; unlevered; developed markets; closed-end blind-pool.
• KED Global, “Korean teachers’ fund to commit $495 mn to 10 PE firms”, 13 May 2025 — KTCU capped at 25% of each fund; ₩200 billion to be raised within nine months.
• KED Global, “Korea Teachers’ Pension seeks 4 brokerage firms…”, 20 October 2025 — deadline 31 October 2025.
• KED Global, RFP Alert listing — the running list of Korean institutional tenders.
• Chambers and Partners, Investment Funds 2026 — South Korea — marketing of private funds must be by a licensed local manager or through a licensed domestic distributor; professional-investor thresholds.
• Preqin, “Guide to accessing Korean capital”, 28 July 2022 — Korean feeder funds; the local-broker rule and its feeder exemption; insurers’ note-feeder preference; the 10% prior-report rule.