Japan’s GPIF Posts Worst Quarterly Loss Since Covid Outbreak

Japan’s Government Pension Investment Fund swung to a loss of 3.57% during the second quarter of the of the fiscal 2024 from a 3.65% gain the previous quarter. The results were the pension giant’s worst quarterly loss since its assets tumbled more than 10% during the outbreak of the Covid pandemic at the end March 2020.

For the first half of the year, the GPIF lost 0.05%, narrowing from a 0.31% loss during the year-ago period. GPIF’s assets totaled 248,227.7 billion yen ($1.612 trillion) at the end of the second quarter.

Foreign bonds weighed down the GPIF’s portfolio the most during the quarter, falling 5.51% and just below its benchmark’s loss of 5.47%. Foreign equities lost 5.35%, missing its benchmark’s loss of 5.07%. Finally, domestic equities declined 4.92% just shy of the 4.90% loss registered by its benchmark.

The GPIF noted a sharp drop in Japanese equities during the quarter after the Bank of Japan raised interest rates. Domestic bonds were the only assets with a positive return at 1.42%, just ahead of its benchmark’s 1.35% return.

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As of the end of September, the pension fund’s asset allocation was 26.74% domestic bonds, up from 25.85% the previous quarter, while foreign equities accounted for 24.98% for the quarter, down from 25.34% in the first quarter. The fund’s foreign bonds’ allocation declined slightly to 24.30% from 24.45%, while the GPIF’s domestic equity holdings amounted to 23.98% of the portfolio, down from 24.37% the previous quarter.

The GPIF’s target allocation is 25% for foreign bonds and 25% for domestic equities, plus or minus 7%, while the allocation for domestic bonds and foreign equities are 25% each, plus or minus 8%.