Japan’s $1.7 Trillion Pension Giant Breaks Record, Returns 25% in 2020

Red hot equities help the world’s largest pension fund rake in $339 billion in investment gains.

 

 

 

 


Japan’s Government Pension Investment Fund (GPIF) reported a record 25% return on its investments, or 37.8 trillion yen (US$339 billion), for the fiscal year ended March 31, raising its total asset value to 186.16 trillion yen, or approximately $1.68 trillion. Its returns marked a record for the fund dating back to its inception in 2001. 

The robust returns were buoyed by the portfolio’s foreign and domestic equities, which gained 59.42% and 41.55%, respectively, for the year. Foreign bonds returned 7.06% for 2020, while domestic bonds were a drag on the fund, losing 0.68% during the year. 

For the fourth quarter of 2020, the fund’s portfolio returned 5.65%, or approximately 10.04 trillion yen. And like the full-year 2020 results, the strong return was led by foreign and domestic equities, which returned 12.04% and 9.26%, respectively, for the quarter.  

The performance is all the more impressive considering that more than a quarter (25.92%) of the portfolio is invested in underperforming domestic bonds, though the results benefited from the fund managers reducing the allocation to the asset class from 35% last year. The 10% was shifted into better-performing foreign bonds. Foreign equities account for 24.89% of the assets, while foreign bonds and domestic equities make up 24.61% and 24.58%, respectively. It uses mainly passive exchange-traded fund (ETF) strategies that reflect the markets.

Want the latest institutional investment industry
news and insights? Sign up for CIO newsletters.

The fund also allocates 5.7 trillion yen, which is the equivalent of more than $51.4 billion or approximately 3% of the portfolio, to environmental, social, and governance (ESG) indexes, and it owns approximately 440 billion yen in green, social, and sustainability bonds issued by multilateral banks including the World Bank.

Related Stories:

Japan’s GPIF Wants to Minimize the Drawbacks of Investing in Alts

Japan’s Government Pension Investment Fund Returns 3.05% in Q2

Japanese Pension Fund Loses $77 Billion in Fiscal 2019

Tags: , , , , ,

«