Japan's Government Pension Investment Fund, Tokyo, on Thursday reported an increase in the value of its investment portfolio to ¥141.1 trillion ($1.2 trillion) as of June 30, the close of its fiscal first quarter, up 2.7% from the prior quarter.
A news release on the GPIF's website said domestic stocks gains and a decline in the yen's value helped the pension fund post an investment return of 1.92%, or ¥2.6 trillion, for the quarter.
The world's largest pension fund is continuing its shift into risk assets and away from Japanese government bonds. As of June 30, the GPIF's allocation was 38% domestic bonds, 23.4% domestic equities, 22.3% international equities, 13% international bonds and 3.3% cash. That compared to an allocation as of March 31 of 39.4% for domestic bonds; 22% for domestic equities; 20.9% for international equities; 12.6% for international bonds and 5.1% for cash.
In October 2014, the GPIF slashed its asset allocation target for domestic bonds to 35% from 60%, while raising its targets for both domestic equities and international equities to 25% from 12%, and overseas bonds to 15% from 11%. It eliminated a 5% allocation to cash.
The new asset allocation framework included a 5% ceiling for alternatives allocations within those four broad asset class segments. In its latest report, the GPIF said currently only 0.05% of assets have been invested in alternatives.
For the quarter, Japan's major stock market benchmark indexes rose roughly 5.5%, yielding a ¥1.9 trillion gain on the GPIF's domestic equity holdings — or roughly 70% of the pension fund's total investment gain for the period.
The Dow Jones industrial average, meanwhile, slipped 0.9%. However, with the yen declining 2% vs. the dollar and just less than 6% vs. the euro, the pension fund enjoyed a ¥699 billion gain on its international equity allocations.