Japanese pension fund GPIF clocks 1.5% return for FY2019

Shibuya, Tokyo, Japan. Photo by Jezael Melgoza on Unsplash

Japan’s Government Pension Investment Fund (GPIF), the world’s largest retirement savings fund, has returned 1.5 per cent for the year-ended March 2019 as compared to 6.9 per cent in the previous fiscal amid wide losses in its equity exposure during the last three months of 2018.

Investment returns for the year were recorded at $21.9 billion (Yen 2,379.5 billion) as the portfolio or assets under management for the pension fund increased from Yen 156.4 trillion last fiscal to $1.47 trillion (Yen 159.2 trillion), according to the investments results made public by GPIF.

The pension fund’s domestic and foreign equities portfolio suffered double-digit losses in third quarter of the fiscal — 17.6 per cent and 15.7 per cent respectively. However, with a pick up in foreign equity in the fourth quarter (Jan-March), the fund was able to record earning for the year tiding over its losses.

Foreign equities, which account for 25 per cent of the fund’s portfolio, picked up in the fourth quarter delivering an over 8 per cent returns. The trend could be partly due to the rally in global equities early this year when central banks kept their stance against hiking interest rates amid China-US trade tensions.

Meanwhile, Japanese equities, which also form one-fourth of the fund’s portfolio, still produced a negative return of over 5 per cent, translating into a $19.1-billion (Yen 2.07 trillion) of erosion into the total returns for GPIF in the period under review.

The pension fund, that invests in listed equities, bonds and alternative assets including private equity, real estate and infrastructure increased its holdings in stocks and cut bonds, reworking its strategy in 2014. In fact, the new strategy worked for GPIF as it generated a positive return for three financial years since 2014.

The fund has also continued its push for foreign assets and alternatives increasing allocation to alternative assets to 3 per cent from 0.2 per cent till 2021.

GPIF’s domestic bond holdings at the end of March this year was at 35 per cent while 15 per cent was in the form of foreign bonds. For the fund, domestic bonds delivered $21.8 billion (Yen 2.37 trillion) for the year while foreign bonds for the pension fund clocked a return worth $6.4 billion (Yen 697 billion).