Japan’s Government Pension Investment Fund reported a 5.2% investment gain to ¥137 trillion ($1.15 trillion) for the Tokyo-based pension fund’s fiscal third quarter ended Dec. 31.
Its asset allocation at the end of the latest quarter was 43% domestic bonds, down from 50% as of Sept. 30; 20% domestic equity, up from 18%; 20% international equity, up from 17%; 13% international bonds, up from 12%, and 4% cash, up from 3%, said an announcement on the pension fund’s website Friday.
The latest figures suggest steady progress toward meeting aggressive asset allocation targets the GPIF adopted in October, which called for slashing the weight of domestic bonds to 35% from 60%, while roughly doubling its holdings of domestic and international stocks to 25% each. The target for international bonds was raised to 15% from 11%.
The breakdown detailing the contribution of each asset class to the GPIF’s ¥6.6 trillion in investment gains showed the move into risk assets paying dividends for the latest quarter, with international stocks accounting for 37.4% of the total, followed by domestic stocks at 23.7% and international bonds at 23.1%.
Japan’s low-yielding government bonds, still the biggest single segment of the portfolio, accounted for 15.8% of the gains for the quarter.
For the first time, the GPIF’s latest asset allocation didn’t break down domestic bond holdings into Japanese government bonds and the government’s non-publicly traded Fiscal Investment Loan Program bonds. FILP bonds accounted for 4.95% of the GPIF’s portfolio as of Sept. 30. It was not immediately clear what happened to that allocation.
The GPIF’s asset allocation is closely watched by market participants, as a one-percentage-point shift amounts to more than $10 billion in capital flows, everything else being equal.
For the latest quarter, however, everything wasn’t equal, with the benchmark Nikkei 225 stock index rising 7.9% to 17,450.77 and the dollar climbing 8.9% compared to the yen over the three-month period — big enough shifts to affect the pension fund’s asset allocation numbers.
With the latest quarter’s results, the GPIF has posted a gain of 9.96% for the first three quarters of its fiscal year ending March 31.
