World’s largest pension fund GPIF posts 683.2 billion yen quarterly loss

JAPAN’S state pension fund, the world’s largest, posted a loss of 683.2 billion yen (US$4.5 billion) on total assets during the three months through September as its holdings of domestic debt had a record slump.

The government Pension Investment Fund lost 0.3 per cent during the quarter, the fund said in Tokyo on Thursday (Nov 2). Total assets rose slightly to 219.32 trillion yen due to a transfer of funds from the government’s account that manages its pension, according to a spokesperson. Domestic bonds lost 2.7 per cent, the most since the fund’s predecessor started investing in 2001. Japanese stocks returned 2.5 per cent.

Strength in the US dollar against the yen supported overseas assets. The GPIF’s holdings of shares abroad lost 0.1 per cent, while its non-Japanese bonds lost 0.8 per cent as the US dollar gained more than 3 per cent against the yen during the period.

With about one-fourth of the fund’s assets consisting of domestic bonds, the latest loss illustrates the growing risk of holding the securities as the Bank of Japan slowly moves away from its ultra-loose monetary policy. Yields on benchmark 10-year bonds hit a fresh decade high this week after the central bank adjusted its stimulus to allow long-term yields to edge higher.

“We will make investments from a long-term perspective and fulfil our fiduciary duty to leave funds to support our pension system,” Masataka Miyazono, president of the fund, said in a statement.

During the three months ended September, the MSCI global stock index fell 3.8 per cent and the S&P 500 Index slid 3.7 per cent, while the Topix gained 1.5 per cent. Yields on 10-year US Treasuries rose 73 basis points in the period, while benchmark Japanese government bond yields added 37 basis points. BLOOMBERG