The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments.
The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008.
The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain. The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style.
Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds. GPIF had 39 per cent of its assets in Japanese debt at Sept. 30, and 21 per cent in the nation's equities, according to the statement. That compares with 38 per cent and 23 per cent three months earlier, respectively.
The fund had 22 per cent of its investments in foreign stocks at the end of September, and 14 per cent in overseas bonds. The retirement fund's stock investments are largely passive, meaning returns typically track benchmark gauges. GPIF's Japan equities slid 13 per cent, the same decline posted by the Topix index, as China's yuan devaluation and concern about the potential impact if the Federal Reserve raises interest rates roiled global markets.
Bloomberg
