Japan's Government Pension Investment Fund on Friday reported a 3.9% gain for the quarter ended Dec. 31, buoyed by the continued advance of global stock markets.
The gain lifted the value of the GPIF portfolio to ¥162.7 trillion ($1.44 trillion).
Norihiro Takahashi, GPIF's president, said in a statement that strong corporate earnings globally and relatively stable foreign-exchange markets provided a backdrop that saw the pension fund's allocations to domestic and overseas stocks and bonds all contribute to solid gains for the quarter.
But stocks led the way.
For the first time since October 2014, when the GPIF more than doubled its target allocations to domestic and foreign stocks, equities ended the quarter accounting for more than half of the Tokyo-based pension fund's overall portfolio — 26.05% in domestic equities and 25.08% in overseas equities.
The fund's cash holdings, meanwhile, fell to 7.1% from a record 9.1% of the portfolio at the end of September. The GPIF's holdings of domestic bonds dropped to a new record low of 27.67%, edging toward the lower end of its permitted 10-percentage-point range on either side of the 35% target allocation.
A GPIF news release said the fund enjoyed an investment gain of ¥6.1 trillion for the quarter.
Domestic stocks were the top contributor to that total, racking up ¥3.4 trillion in gains, followed by ¥2.2 trillion from overseas stocks, ¥276 billion from overseas bonds and ¥176 billion from domestic bonds.
The fund's allocations to alternatives strategies — counted as part of its allocations to equities or bonds depending on the characteristics of the alternatives asset class — held steady from the previous quarter at 10 basis points. Just before the quarter ended, GPIF announced it had hired its first alternatives manager, Mitsubishi UFJ Trust and Banking to oversee a core domestic real estate fund-of-funds allocation.
More recently, GPIF announced it had hired its second alternatives managers, StepStone Group, to manage a core global infrastructure fund-of-funds strategy.