World’s biggest pension fund adds US$39bil as stocks rise

TOKYO: The world’s biggest pension fund posted its fifth straight quarterly gain, the longest run in more than two years, as global stocks advanced to new highs and weakness in the yen helped boost the value of overseas investments.

Japan’s Government Pension Investment Fund (GPIF) returned 3%, or 4.5 trillion yen (US$39bil), in the three months ended Sept 30, increasing assets to a record 156.8 trillion yen, it said in Tokyo. Domestic equities added 1.8 trillion yen as the value of foreign equities increased by two trillion yen, particularly boosted by the euro’s strength.

Prospects for higher corporate earnings have driven the Topix index to levels unseen in more than a decade, while US stock benchmarks climbed to records on confidence the world’s largest economy will sustain its growth. GPIF’s string of gains follows a series of losses after it overhauled its strategy in 2014 to buy more shares and cut debt.

“Their investment itself is going well, and going forward I don’t expect a lot of movement from them that would impact the market” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd.

“Japanese stocks have been rising so there’s a possibility GPIF will sell to balance their portfolio, but right now I’m not hearing a lot of speculation on that.”

The fund’s Japanese stocks returned 4.8% over the three months, above the Topix’s rise of almost 4%. Overseas stocks added 5.6%, helped by a 3.4% drop in the yen against the euro, as well as weakness versus the greenback, increasing the value of foreign holdings when repatriated. The MSCI All-Country World Index of global stocks climbed 4.7% last quarter.

“At GPIF we manage assets from a longterm perspective,” GPIF president Norihiro Takahashi said in a statement Thursday.

The fund’s domestic bond holdings, which accounted for 28.5% of total assets, posted a 0.2% gain. Foreign bonds added 2.5%, making up 14% of GPIF’s investments at the end of September. Japanese stocks accounted for 24% of holdings, while overseas equities were 24% of assets. The target levels for GPIF’s portfolio are 35% for domestic debt, 15% for foreign bonds, and 25% each for domestic and overseas shares.

The percentage allocations for foreign bonds, overseas stocks and short-term assets were all at record highs.