Japanese Pension Giant Returns 2.81% in Q3 2021

Japan’s Government Pension Investment Fund, the world’s largest pension fund, reported third quarter investment returns of 2.81%, or $47.13 billion, to increase its total asset value to 199.25 trillion yen or $1.727 trillion.

That is down from the 6.29% return the fund reported during the year-earlier quarter, but up from the 0.98% return for the second quarter of 2021.

As of the end of 2021, the pension fund’s asset allocation was 25.68% in foreign equities, 24.95% in domestic bonds, 24.92% in domestic equities, and 24.46% in foreign bonds.

Foreign equity was the fund’s top-performing asset class, returning 10.54% for the quarter; however, this was just below its benchmark’s return of 10.92% during the period. The fund’s foreign bond investments returned 2.52%, just beating its benchmark’s return of 2.51%, and Japanese bonds were relatively flat for the quarter, with a loss of 0.02%, compared with a 0.07% loss for its benchmark. Meanwhile Japanese equities declined 1.62%, which was a shade better than its benchmark’s drop of 1.69%.

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Foreign equities have been driving the fund’s performance all year, returning 19.14% for the first three quarters of 2021, while foreign bonds and domestic equities returned 3.56% and 3.38%, respectively, so far this year.

Overall, the pension fund has returned 6.59% during the first three quarters of the year. The returns are solid, but well off the pace to match 2020, when the pension fund returned 25.15%, and its foreign and domestic equity investments returned 59.42% and 41.55%, respectively.