Japan’s GPIF Loses $28 Billion in First Quarter of Fiscal Year 2022

The investment portfolio of Japan’s Government Pension Investment Fund lost 1.90%, or 3.75 trillion yen ($27.8 billion), during the first quarter of the fiscal year 2022 ending June 30, reducing its total asset value to just over 193 trillion yen, or $1.43 trillion.

It was the GPIF portfolio’s worst performance since the fourth quarter of 2019, and the second straight quarter the pension fund declined—the first time that has happened in six years. The portfolio returned 2.68% during the year-ago quarter.

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Foreign bonds were the only investments with positive returns during the quarter, gaining 2.71% and outperforming their benchmark by five basis points. And despite being the top-performing asset class in 2021 by far, foreign equities began the fiscal year as the asset class weighing down the portfolio the most, losing 5.36% during the first quarter. On the positive side, however, the asset class beat its benchmark by 15 basis points.

Meanwhile, domestic equities lost 3.68% and missed their benchmark by three basis points, while the pension funds’ investments in domestic bonds declined 1.31%, just below their benchmark’s loss of 1.30%.

“Major stock indices domestically and globally fell amid concerns over an economic slowdown from monetary tightening as major central banks around the world raised rates or unwound quantitative easing with inflation progressing,” GPIF President Masataka

Miyazono said in a statement, according to Bloomberg.

As of June 30, the pension fund’s asset allocation was 25.70% in foreign bonds, 25.65% in domestic bonds, 24.53% in domestic equities and 24.12% in foreign equities.

For fiscal year 2021, which ended March 31, the pension fund reported a 5.42% return, increasing its asset value by 10.1 trillion yen to end the year at 196.59 trillion. However, it ended the year on a down note, losing 1.10% in the fourth quarter. The first-quarter loss in fiscal 2022 marked the first time the pension fund reported back-to-back quarterly losses since it declined 3.52% in the fourth quarter of fiscal 2015 and 3.88% in the first quarter of fiscal 2016, according to reports from the fund.

Foreign equities led the portfolio in 2021, returning 18.48%, with foreign bonds and domestic equities a distant second and third, returning 2.29% and 2.12% respectively. Domestic bonds were the only assets that declined in 2021, losing 0.99%.