The world biggest pension fund posted a record loss in the first three month of 2020 after the coronavirus pandemic sparked a global market rout in the period.
Japans government pension investment fund lost 11%, or 17.7tr yen ($164.7bn), in the three months ended March, it’s said in Tokyo early July. The decline in value was the steepest based on comparable data back to April 2008, reducing the funds total assets to 150.63tr yen. Foreign stocks were the worst performing investment, followed by domestic equities.
The results come just months after the fund revamped top management and revised its asset allocation to focus more on overseas debt. The loss, which wiped out gains for the fiscal year, may attract political attention as social security remains a major concern for tens of millions of Japans retires.
“the decline in domestic and foreign equities led to a negative return for the fiscal year”, said Masataka Miyazono, the president of APIF. “Both equity markets performed strongly during 2019 even under pressures from the US – China trade negotiations. The global coronavirus pandemic led to investors taking a risk – off stance”.
Overseas bonds were the only major assets to generate a positive quarterly return. The securities gained 0.5% for domestic bonds, 18% for local equities and 22% for foreign stocks. In April, GPIF raised its asset allocation to foreign bonds by 10 percentage points to 25%, while keeping the target for foreign and domestic stocks unchanged at 25%.
Noiki Fujiwara, the chief fund manager at Shinkim Asset Management Co, said the losses were expected. Equities have rebounded since March, so the pension fund should be recouping losses for the April – June period, Fujiwara said.
“The current portfolio is exposed to equity volatility”, he said “we’re in a low – yield environment right now. But in the long run, the pension fund should correct the allocation of equities”,
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