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Japan's GPIF FY 2018/19 return drops to 1.52% on domestic stock losses

By Asia Asset Management  
Jul 9, 2019

Japan’s Government Pension Investment Fund (GPIF) posted a return of 1.52%, or 2.3 trillion yen (US$21.9 billion), on its investments in the year ended March 31, 2019, sharply down from 6.9% in the prior year, dragged by losses on Japanese stocks.

This translates into an annualised return of 3.03% since the GPIF, the world’s largest pension fund, was set up in 2001, the fund says in its annual investment report on July 5. Its financial year runs from April 1 to March 31.

The fund lost 2.07 trillion yen, or a return of minus 5.09%, on investments in domestic stocks in the last financial year, a period during which the benchmark Tokyo Stock Price Index fell more than 7.4%.

It gained 3.14 trillion yen on investments in foreign stocks, or a return of 8.12%, the highest of all the asset classes in which the fund is invested. Foreign stocks accounted for one-quarter of the GPIF’s total assets.

A GPIF spokesperson says the fund’s investments in both foreign and domestic stocks declined between October and December 2018 as a result of a global “risk-off” mood.

“However, foreign equities recovered in the fourth quarter [of the fund’s financial year] with the rebound of US stock market, but Japanese equities did not show the [same] recovery as foreign equities,” the spokesperson tells Asia Asset Management (AAM).

GPIF’s investments in foreign and domestic bonds returned 2.7% and 1.43%, respectively, in the year ended March 31.

A Hong Kong-based fund analyst says the pension fund’s results are in line with market expectations.

He notes that the fund had a 15.66% return from investments in domestic stocks in its prior financial year.

“But GPIF has been working hard on increasing its allocation to foreign assets in order to improve its investment return,” the analyst tells AAM, speaking on condition of anonymity.

GPIF had around 159 trillion yen of total assets as of March 2019.