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Stocks

Japan pension megafund seen logging record quarterly return

Trump- fueled stock rally buoys October-December performance

TOKYO -- Japan's Government Pension Investment Fund posted an investment gain for the second straight quarter in October-December, possibly marking its best three-month period on record on soaring stocks and the weak yen since the U.S. presidential election.

Masahiro Nishikawa, chief fiscal policy analyst at Nomura Securities, estimates the figure at over 10 trillion yen ($87.1 billion), with 4 trillion yen coming from Japanese stocks and 5.2 trillion yen from foreign shares.

Bond prices are falling as long-term interest rates rise in the U.S. and other countries. But the world's largest public pension fund still managed to generate a return of 1.4 trillion yen on foreign bonds thanks to a soft yen. It lost 570 billion yen on domestic bonds.

The GPIF will officially report its performance on March 3. If Nishikawa's estimate is correct, October-December results would top the previous record of 7.6 trillion yen set in January-March 2013. That would put returns at 7.2 trillion yen on a net basis for the April-December period.

The fund doubled its weighting of domestic and foreign shares in October 2014 to a combined 50% of its portfolio. It made a record 15 trillion yen or so in fiscal 2014 on strong stocks, but a sluggish market afterward had weighed on its performance.

"It's unclear where the market rally fueled by U.S. President-elect Donald Trump is headed, and both stocks and the yen could return to previous levels after he takes office," Nishikawa said.

(Nikkei)

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