September 2020
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September 2020
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Japan’s GPIF bounces back from record pandemic-triggered loss

Japan pension
By Hui Ching-hoo   
August 11, 2020

Japan’s Government Pension Investment Fund (GPIF) recorded an 8.3% return on investments in the first quarter of its current financial year, bouncing back from a record loss as stock markets recovered after being hammered by the coronavirus pandemic.

The fund’s investments gained 12.48 trillion yen (US$118 billion) in April through June, translating into an annualised return of 2.97% since its inception in 2001, and raising its total assets under management to around 162.09 trillion yen, GPIF says in a statement on August 7.

The world’s largest pension fund had incurred a 17.71 trillion yen loss on investments in January through March, or a minus 10.71% return, the worst in any quarter of its 19-year history, as fears of the pandemic ripped through global markets.

“But the fund has significantly benefited from the recent rallies of domestic and global stock markets with global central banks’ monetary easing and many governments’ stimulus packages,” a fund manager in Hong Kong tells Asia Asset Management, speaking on condition of anonymity.

He notes that the new figures mark the GPIF’s recovery from a record 5.2% investment loss for its financial year ended March 31, 2020.

The benchmark Tokyo Stock Price Index rose 11.25% in the second quarter after a near 30% plunge in the first three months of the year, and the MSCI ACWI Index, the GPIF’s foreign benchmark, rebounded almost 20% from a 21.7% decline.

The stock gains were mirrored in the pension fund’s investment portfolio.

Its foreign equity investments returned 20% after a 22% loss in the first quarter, and the return from Japanese stocks rebounded 10.95% after a 17.63% loss previously.

Its return on investments in foreign bonds increased to 3.45% from 0.5%.

The only one of the GPIF’s asset classes to report a loss was domestic bonds, with a return of minus 0.46% versus minus 0.51% previously.