JAPAN PENSION FUND LOGS RECORD PROFIT
GPIF gain boosted by stock market rally
JAPAN’S Government Pension Investment Fund (GPIF), the world’s largest pension fund, posted a record quarterly gain of US$92 billion (RM409.4 billion), thanks to a rally in the country’s stock market.
GPIF yesterday reported a return of 7.98 per cent in its fiscal third quarter, which ended in December.
Its paper gain totalled 10.5 trillion yen (RM409.4 billion). The fund managed 144.8 trillion yen worth of assets as of December.
“We had a big gain in the quarter but there are many complex issues in the world economy so we would carefully manage the assets,” said GPIF spokesman Shinichiro Mori yesterday.
Japan’s benchmark Nikkei share index rallied 16 per cent in the quarter on expectations of stronger global economic growth and as the yen weakened in the face of a surging US dollar following the election of President Donald Trump. It edged up another two per cent from January to this month.
In 2014 GPIF made a historic policy shift, increasing investments in riskier assets such as stocks for higher returns, while it reduced reliance on low-yielding domestic bonds.
Of all the pension reserve, which included 2.5 trillion yen pooled at Japan’s health ministry, 23.76 per cent was allocated to Japanese stocks.
GPIF’s domestic bond holdings accounted for 33.26 per cent of its assets, underweighting its allocation target set in 2014 for the first time as yields increased.
The fund allocated 13.37 per cent of its assets to foreign bonds and 23.16 per cent to foreign stocks. The remaining 6.3 per cent was mainly cash GPIF holds.
Its Japanese stock holdings returned 15.18 per cent, while the domestic bond holdings had a negative return of 1.07 per cent.
GPIF directly invests only in a portion of bonds, while it asks other financial institutions to manage most of the bonds and all the stocks.
The Government Pension Investment Fund made a policy shift three years ago, increasing exposure to riskier assets such as stocks and reducing reliance on low-yielding local bonds.