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Japan’s GPIF: 3% gain for Sept. 30 quarter lifts portfolio to ¥156.8 trillion

Japan's Government Pension Investment Fund said Thursday rising global equity markets helped the fund rack up a 3% investment gain for the quarter ended Sept. 30, lifting the value of its portfolio to 156.8 trillion ($1.4 trillion).

The world's largest pension fund managed that healthy result despite reporting a record 9.1% of its portfolio in cash at the close of its fiscal second quarter, up from 7.7% on June 30.

The Tokyo-based GPIF, in a news release, reported a 4.45 trillion yen investment gain for the period. The bulk of those returns came from a 2.0 trillion yen – or 5.5% – gain on its 24% foreign equity allocation, and a 1.8 trillion yen – or 4.79% – gain on its 24.4% domestic equity allocation.

At the close of the prior quarter, GPIF's allocations to foreign and domestic equities stood at 23.9% and 24.4% respectively.

Meanwhile, GPIF reported a record low allocation to Japanese government bonds for the pension fund of 28.5%, down from 30.5% three months before.

For the latest period, the value of the fund's domestic bonds edged up 16 basis points for investment gains of 75 billion.

The continued drop in domestic bonds left the fund's allocation further below its 35% investment target for an asset segment which accounted for 60% or more of the portfolio prior to an October, 2014 asset allocation shift. The fund is permitted to hold between 25% to 45% of its portfolio in domestic bonds.

The fund's foreign bond allocation ended the latest period at 14%, up from 13.5% three months earlier. For the latest period, foreign bonds enjoyed a 2.5% gain, adding 540 billion yen of investment gains.

GPIF's allocations to alternatives – such as private equity, infrastructure and real estate – remained steady at a marginal 10 basis points of the portfolio.

Norihiro Takahashi, GPIF's president, said in a statement that continued favorable market and economic conditions provided the backdrop for the fund's latest advance.

The portfolio's 156.8 trillion value at the close of the latest quarter was up 5.1% from the prior quarter.