Japan’s Sovereign Wealth Fund Surpasses Norway’s as World’s Largest

Japan’s Government Pension Investment Fund’s (GPIF) investment portfolio returned 1.52%, or 2.38 trillion yen ($22.1 billion), for the fiscal year 2018 ended March 31, raising its total asset value to 159.215 trillion yen, or approximately $1.464 trillion. This makes it the largest pension fund in the world. with Norway’s Government Pension Fund Global behind by nearly $400 billion.

As of the end of March, the Norway fund had a market value of 8,938 billion kroner, which is equal to approximately $1.033 trillion at current exchange rates. Norges Bank, Norway’s central bank, has a ticker on its website that is a real-time running tally of the fund’s market value, which at the time of the writing of this article was 9,276 kroner, or approximately $1.073 trillion. While that was up $40 billion thanks in large part to strong first quarter results, it still puts it well behind Japan’s fund.

Japan’s fund managed to eek out positive gains for the year despite a rough fiscal third quarter ended December 31, when its investments tumbled more than 9% and the portfolio shed more than 14.8 trillion yen in value.

For fiscal 2018, foreign equities was the top-performing asset class for Japan’s GPIF, returning 8.12%, followed far behind by foreign and domestic bonds, which returned 2.7% and 1.4%, respectively. The worst-performing asset class for the fund was domestic equities, which lost 5.09% for the year.

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Japan’s GPIF also reported that its annual rate of return has been 3.03% since fiscal 2001, bringing in cumulative returns of 65.82 trillion yen, which is more than 41% of its current total asset value.

The asset allocation for the fund as of the end of March was 26.3% in domestic bonds, 25.53% in foreign equities, 23.55% in domestic equities, 16.95% in foreign bonds, and 7.67% in short-term assets.

The portfolio is tech-heavy when it comes to equities as its four largest equity holdings as of March 31 are Microsoft, Facebook, Apple, and Amazon, with stakes worth $8.8 billion, $7.9 billion, $7.3 billion, and $4.2 billion, respectively, as of July 9. The portfolio also has nearly $3.4 billion worth of shares in Johnson & Johnson, just under $3.3 billion in JPMorgan Chase, and a $3.2 billion stake in Visa.

Tags: GPFG, GPIF, Japan, Norway, Pension, Sovereign Wealth Fund

Fund keeps Shell and BP for now, but it will still watch the companies it did not divest from to see if—and how—their ESG efforts are improving.

PenSam, Denmark’s $17 billion labor pension fund, is excluding 26 more oil companies in support of the Paris Agreement’s climate goals.

Divestments from 12 firms totalled about $19.7 million. PenSam has removed 100 oil, coal, and tar sands businesses from its portfolio since 2016.

Some of the new exclusions include Hess, Marathon Oil, and OMV Oil. The fund recently set a goal to have 10% of its portfolio invested in companies supporting a “green transition,” meaning also keeping plans in line with the accords, by 2025.

The Paris Agreement wants to keep the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels.

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“When we choose to exclude and sell oil companies, it is about investing our members’ pension responsibly and backing on a future where the energy goes from black to green,” says Torsten Fels, chief executive officer of PenSam.

The plan did not completely divest, as it sees some oil necessary as long as those firms are open to a greener mission (Royal Dutch Shell and BP are some businesses it has decided to stick with). ExxonMobil is one of 14 other gas giants on the new 26-firm exclusion list that will no longer receive investments from PenSam.

“As a responsible investor, we support the companies that change their minds to meet the objectives of the Paris Agreement, and therefore we have chosen to keep a number of companies related to oil,” Fels said.

PenSam chose which companies it would divest from and exclude based on a data tool created by Carbon Tracker, an environmental, social, and governance (ESG) think tank.

The fund said it will “continuously analyze” the progress of the still-vested oil firms, and further exclusion and divestment is possible.

“We are constantly working to integrate the Paris Agreement into our investment work, which means that we both make our investments greener, but that also means that we must part with the companies that can either become a poor investment or directly counteracts the objectives of the Paris Agreement, ” Fels said.

PenSam covers the retirement assets of mostly public workers in the health, social care, and education sectors.

Tags: Climate Change, Denmark, Divestment, ESG, oil and gas, Paris agreement, PenSam, Pension