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.