World’s biggest pension fund drops $51bn in shares rout

The world’s biggest pension fund posted the worst annual performance since the global financial crisis, with losses exacerbated by unfavourable currency moves and a foray into equity markets.

Japan’s $1.3tn (€1.1tn) Government Pension Investment Fund (GPIF) lost 3.8% in the year to the end of March, or $51bn, the retirement manager yesterday said.

That’s the biggest drop since 2009. GPIF lost 10.8% on domestic equities and 9.6% on shares in other markets, while Japanese bonds handed the fund a 4.1% gain.

The annual loss — GPIF’s first since doubling its allocation to stocks and paring domestic bond holdings in October 2014 — came during a volatile stint for markets.

Japanese shares sank 13% in the year through March while the yen climbed 6.7% against the dollar, reducing returns from overseas investments.

The only asset class to post a profit was local debt, which jumped in value as the Bank of Japan’s adoption of negative interest rates sent yields tumbling.

“The results are painful,” Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management said.

“Because it’s a pension fund, they need to have a long-term outlook, so I don’t think we can say yet that they took on too much risk. It was a harsh investment environment for most of us.”

In a press briefing, GPIF president Norihiro Takahashi said he will reflect on the performance, but that the current portfolio has enough flexibility to adapt to different market conditions and he wants to run the fund steadily.

Yoshihide Suga, Japan’s chief government spokesman, said GPIF’s management should not be influenced by short-term moves and there is absolutely no issue with its financing.

The fund also disclosed individual stock holdings and the issuers of the bonds it held as of March 2015, the first time it’s divulged such detail. GPIF’s biggest investments in stocks were Toyota and Mitsubishi Financial Group in Tokyo and Apple outside Japan.

The fund’s largest debt holdings included Japanese government bonds and US Treasuries.


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