Japan's public pension fund racked up losses of 5.3 trillion yen ($51.3 billion) from its investments last fiscal year, its first full-year loss in five years, as the world's largest pension fund continued its efforts to diversify into riskier assets.
Japan’s public pension fund racked up losses of 5.3 trillion yen ($51.3 billion) from its investments last fiscal year, its first full-year loss in five years, as the world’s largest pension fund continued its efforts to diversify into riskier assets.
The Government Pension Investment Fund’s (GPIF) loss for the year through March was due to sharp falls in Japan’s stock market amid broader global market turmoil that was sparked by volatility in Chinese financial markets from around mid-2015.
“I take the results humbly,” GPIF President Norihiro Takahashi told at a media briefing. “But a short-term dent in our performance will not affect pension money in the long term.”
The $1.4 trillion GPIF made a historic shift by cutting its reliance on low-yielding domestic bonds and increasing weightings of stocks and other riskier assets in 2014, in response to Prime Minister Shinzo Abe’s push to promote a risk-taking investment approach.
As of March, GPIF’s stock holdings accounted for 21.75 percent of its total assets, a slight fall from 22 percent a year ago, while its allocation in Japanese bonds fell to 37.55 percent from 39.39 percent a year ago.
GPIF’s overall assets made a negative return of 3.81 percent last fiscal year, dragged by its Japanese stock portfolio which logged a negative 10.8 percent return.
Its Japanese bond investments generated a 4.07 percent yield, the only asset with a positive return among GPIF’s four assets, which also include foreign bonds and stocks.
“We did not see an effect of the diversification of our assets this fiscal year,” Takahashi said. “As a result, Japanese bonds were the only asset class whose price rose.”
Takahashi said he was positive about the fund’s current allocation being able to respond to market conditions in the future.
“GPIF now has a very strong advantage after diversifying our portfolio,” he said, noting it was difficult to earn income from Japanese government bonds any longer.
Japan’s benchmark Nikkei 225 lost 12.7 percent last fiscal year.
GPIF, in its first attempt, disclosed details of its investment holdings. The pension fund had owned shares in 2,037 stocks, which included Toyota Motor Corp, Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group , Honda Motor Co, Softbank Group Corp, in the year through March 2015.
The information could potentially move market prices so GPIF only released details for the previous fiscal year.