TOKYO • The world's biggest pension fund posted its best annual gain in two years, as Japanese and overseas stocks rose while government bonds slid.
The Government Pension Investment Fund (GPIF) returned 5.9 per cent, or 7.9 trillion yen (S$96 billion), in the year ended March 31, increasing its assets to a record 144.9 trillion yen, it said yesterday.
That is the biggest advance since fiscal year 2015, when it had its best annual performance on record.
Domestic equities added 4.6 trillion yen as the benchmark Topix index climbed 12 per cent, outweighing a loss on foreign and domestic bond holdings. Foreign stocks rose, increasing 4.3 trillion yen.
The Japanese retirement fund's annual gain is a welcome change from the year before when it posted its worst performance since the global financial crisis after overhauling its strategy in 2014 to buy more shares and cut debt assets.
GPIF, which has more than 80 per cent of its stock investments in strategies that track indexes, benefits when broader equity markets are rising.
Said GPIF president Norihiro Takahashi to reporters: "Our mission is to gain stable returns while maintaining as forward-looking a view as possible on the market."
Japanese shares returned 15 per cent over the year for GPIF. Overseas stocks added 14 per cent, while the yen gained 1.1 per cent against the greenback, slightly cutting into the value of foreign holdings when repatriated. The S&P 500 index had risen 14 per cent in the same period. Volatility had made foreseeing the future difficult, Mr Takahashi said.
The fund's domestic bonds fell 0.9 per cent, bringing holdings to 32 per cent of assets, as an index of Japanese government debt dropped 1.3 per cent. Foreign bonds lost 3.2 per cent, and accounted for 13 per cent of GPIF's investments as of March.
Cash holdings increased to 8.9 per cent from 5.1 per cent in the previous year to enable the fund to eventually invest in other assets, Mr Takahashi said.
Japanese stocks made up 23 per cent of holdings, while overseas equities were 23 per cent of assets. The target levels for GPIF's portfolio are 35 per cent for domestic debt, 15 per cent for foreign bonds, and 25 per cent each for domestic and overseas shares. Alternative assets accounted for 0.07 per cent of GPIF's holdings, well below the allowable limit of 5 per cent.
The fund also disclosed individual stock holdings and the issuers of the bonds that it held as of March this year, a practice started in July last year. GPIF's biggest equity stakes were in Toyota Motor and Mitsubishi UFJ Financial Group, and in Apple outside Japan. The fund's largest debt holdings included Japanese government bonds and United States treasuries.