Australia’s second-largest pension fund builds biggest yen position in years, betting on BOJ rate hikes

A pension fund managing roughly A$350-370 billion just made one of the most consequential currency bets in the Asia-Pacific this year. Australian Retirement Trust, the second-largest superannuation fund in Australia, has built its biggest overweight position in the Japanese yen in years, driven by a conviction that traders are underpricing the Bank of Japan’s willingness to keep raising interest rates. The move represents a deliberate pivot away from the US dollar, with ART spreading its currency exposure across the yen, euro, and British pound. Why the yen, why now The Federal Reserve has been signaling a dovish posture, with expectations leaning toward rate cuts or at least a prolonged pause. The Bank of Japan, meanwhile, has been moving in the opposite direction, gradually tightening policy after decades of ultra-loose monetary conditions. ART is essentially betting that the gap between BOJ hawkishness and Fed dovishness is wider than what’s currently priced into currency markets. The fund isn’t limiting its Japan thesis to currency alone. In March 2026, ART increased its holdings in Japanese equities, with a particular focus on financial sector stocks. Banks and insurers tend t...