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September 2022
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Japan’s GPIF equity investments hit as markets slammed

GPIF
By Hui Ching-hoo   
August 10, 2022

Japan’s Government Pension Investment Fund (GPIF), which invests nearly half its assets in equities, saw its investments swing into the red in the first quarter of its current financial year as the war in Ukraine, China’s zero-Covid policy and US rate hikes battered stock markets.

The world’s largest pension fund incurred a 3.75 trillion yen (US$27.83 billion) or 1.19% investment loss in the April-June period of its financial year ending March 2023.

GPIF announced the results in a statement on August 5 without providing any analysis.

A fund manager in Hong Kong points out that the GPIF isn’t an outlier as most global pension funds were also unable to keep their investments profitable amid the Russia-Ukraine war, China’s strict Covid-19 policy and US rate hikes to fight inflation.

“With the highly persistent volatility [in market conditions, the pension funds are] unlikely to see a sharp rebound in their second-half performance,” he tells Asia Asset Management, speaking on condition of anonymity.

The GPIF’s foreign equity investments lost 2.61 trillion yen or 5.36% in the three months to June and its domestic equity investments lost 1.81 trillion yen or 3.68%.

Foreign and domestic equities account for 24.12% and 24.53%, respectively, of GPIF’s total assets.

The pension fund had around 193 trillion yen of assets under management as of June 2022, up from 191.62 trillion yen a year ago.

The first-quarter performance was a turnaround from April-June 2021 when the fund reported a 4.98 trillion yen or 3.7% investment gain. Although its domestic equity investments shed 0.52%, the loss was more than offset by an 8.62% gain in foreign equity investments.

The Hong Kong fund manager expects top investment officers of global pension funds to remain prudent on portfolio rebalancing in the near term.

“Some may speed up their alternative investment plan in order to diversify the market risks,” he says.