Japan's public pension fund snares record return
Trump-inspired market momentum stirs October-December windfall
TOKYO -- Japan's Government Pension Investment Fund earned its largest-ever quarterly return by far, with a profit of roughly 10 trillion yen ($89.3 billion) on investments in the October-December period.
The massive return for the world's biggest pension fund came as the value of foreign-currency-denominated assets rose, buoyed by stock rallies and a weaker yen triggered by Donald Trump's U.S. presidential election win. The previous record of 7.6 trillion yen was achieved in January-March 2013, when the Japanese stock market was swept up by optimism for Prime Minister Shinzo Abe's economic policy.
GPIF, which manages assets for Japan's public pension plans, drastically changed its asset allocation policy in October 2014, doubling equity holdings to as much as half of the fund's overall assets.
A bull run in the stock market helped the fund deliver a record annual return of about 15 trillion yen in fiscal 2014. But the following year saw a roughly 5 trillion yen loss due to a stock slump and a stronger yen. GPIF's overall investment return for April-December 2016 totaled around 7 trillion yen after the fund ended the October-December and July-September quarters in the black.
Masahiro Nishikawa, chief fiscal policy analyst at Nomura Securities, estimates GPIF likely made a combined 9.2 trillion yen profit on its investment in Japanese and foreign shares in the October-December quarter. Foreign bonds probably brought 1.4 trillion yen in profit, but the fund likely lost around 570 billion yen on its domestic bond investment as Japan's long-term interest rates rose.