World’s Largest Pension Fund Hits $1.4 Trillion

Japan’s Government Pension Investment Fund fails to beat its 2014 return record after fourth-quarter stock and treasury slump.

A loss in its final fiscal quarter didn’t stop Japan’s Government Pension Investment Fund (GPIF) from hitting its best gain in three years, bringing the world’s largest pension fund to $1.4 trillion.

Producing a 6.7% total return, domestic equities were the fund’s top performer in the year ended March 31, followed by foreign equities. Local stocks reaped 5.5 trillion yen (up 15.66%), while those overseas returned 3.5 trillion yen (10.15%). Domestic bonds brought in 362 billion yen (.80%), and overseas debt increased by 674 billion yen (3.71%).

With the exception of losses in the final quarter, the fund, which provides pensions for public employees, has seen six straight quarters of gains. 

Losses from the first three months were a result of trade war fears, and a global dive in both equities and treasuries. This stopped the fund from beating its record 12% gain in 2014.

Portfolio allocations were moved around in the latest fiscal year, with nearly every asset class getting a boost. The largest allocation, domestic bonds, now stands at 35% of the total portfolio, from 27.50% in 2017. Foreign bonds make up 15%, from 14.77%. Foreign and domestic equities are both at 25%. Foreign stocks were 23.88% last year, while domestic shares sat at 25.14% in 2017.

Short-term assets have been removed from the portfolio. In fiscal 2017, 8.7% of the portfolio was allocated to the class.

The changes to each asset class are part of the Japanese pension fund’s rebalancing during the fiscal year.

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