The head of the world’s largest pension fund said he is looking beyond the safety of sovereign debt as an era of falling rates forces even the most conservative of investors to rethink playbooks.

Masataka Miyazono, the president of Japan’s mammoth Government Pension Investment Fund with ¥162.1 trillion ($1.5 trillion) in assets, said the fund is looking at a range of foreign debt as it seeks steady returns in pandemic-riven markets after swinging from a record loss to a historic gain in the first six months of the year.

“We’re going to increase the sophistication of our investment, while closely monitoring the risk-return,” Miyazono, 67, said in an interview in Tokyo on Tuesday. “Apart from foreign sovereign bonds there’s also mortgage debt, corporate debt to consider.”

Among the options for the GPIF, as the fund is known, could be to redeploy funds parked in short-term Treasuries into riskier assets after global sovereign yields dropped to record lows. The fund is also considering European debt following the European Union’s agreement on a recovery fund, he said.

“Apart from Treasuries, there’s also European debt, which is more difficult from a currency perspective,” he said. “The EU’s recovery fund is a point of progress to keep in mind, and we’ll see if this is just a short-term move or a move toward reassessing the EU bloc.”

Miyazono could scarcely have taken over the top job at a more challenging time. Appointed just days after the worst of the coronavirus market chaos in March, one of his first public appearances was to announce the fund’s record ¥17.7 trillion loss, a sensitive political topic that makes headlines in an aging nation where social security is a major concern.

New portfolio Miyazono’s time in charge has coincided with the fund making its biggest changes to its asset allocations in years. The fund swung to a record quarterly gain in the three months ended June, and there are no plans in place to alter the fund’s portfolio, Miyazono said.

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