Stock Boom Helps Japan’s GPIF to $100 Billion Quarterly Gain

The world’s biggest pension fund posted a 10.4 trillion yen ($98 billion) gain in the three months ended December, lifting assets to a record as global equity markets extended their recovery from the pandemic.

Japan’s Government Pension Investment Fund gained 6.3%, with assets reaching 177.7 trillion yen, the fund said in a statement. Overseas stocks were its best-performing investment, returning 11.9%, followed by an 11.3% return in domestic stocks. Overseas debt gained 1.2%, while Japanese debt added 0.02%.

“While the coronavirus outbreak widened once again globally, domestic and foreign stocks gained due to expectation for vaccines and continued fiscal and monetary policy support,” said GPIF President Masataka Miyazono in a statement. “In addition, the yen strengthened against the dollar, while it weakened against the euro.”

Stock Boom Helps Japan’s GPIF to $100 Billion Quarterly Gain

Foreign equities have been the GPIF’s top-performing investment for three consecutive quarters, helping to pull the fund’s total assets back above levels seen before the global equity rout during March of last year. Miyazono, who has yet to oversee a loss since he became the fund’s president in April, has said that he wants to look beyond the safety of sovereign debt to help increase the sophistication of investments.

“The markets are set to remain in a risk-on mood,” said Kiyoshi Ishigane, the chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co. in Tokyo. “I don’t see the GPIF suddenly reducing risk -- it will continue to take a positive stance.”

Stock Boom Helps Japan’s GPIF to $100 Billion Quarterly Gain

The MSCI All-Country World Index of global stocks rose 14% last quarter, while Japan’s Topix gained 11%. Yields on 10-year Treasuries climbed 23 basis points to 0.91%, while those of Japanese government debt were little changed near zero. The dollar weakened 2.1% against the yen during the quarter.

Read more: Japan’s GPIF Examining Impact of FTSE Inclusion of China Bonds

Oct.-Dec. performanceEnd-Dec. asset allocationTarget asset allocation
Domestic bonds+7.2 billion yen23.6%25% (± 7ppts)
Domestic stocks+4.65 trillion yen25.3%25% (± 8ppts)
Foreign bonds+524 billion yen25.7%25% (± 6ppts)
Foreign stocks+5.17 trillion yen25.4%25% (± 7ppts)

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