Japan's Government Pension Investment Fund on Friday reported a 5.9% gain for its latest fiscal year ended March 31, lifting the value of the Tokyo-based plan's portfolio to a record high of ¥144.9 trillion ($1.3 trillion).
The GPIF's holdings of domestic and overseas equities contributed ¥4.6 trillion and ¥4.3 trillion, respectively, to the fund's ¥7.9 trillion of investment gains for the year, offset partly by foreign bond losses of ¥596 billion and domestic bond losses of ¥396 billion.
The fund's domestic bond allocation ended the year at a record low of 31.68%, off from 33.26% three months earlier but still well within its permitted range of 10 points on either side of the target allocation of 35%.
The GPIF's cash holdings, meanwhile, rose to a record high of 8.89% from 6.46%.
Allocations to other major asset classes were little changed over the latest quarter, with domestic equities slipping to 23.28% from 23.76%, overseas equities sagging to 23.12% from 23.16% and overseas bonds dipping to 13.03% from 13.37%.
The high cash weighting, at more than ¥13 trillion, left all of the GPIF's allocations to risk assets below target. Domestic bonds sported the widest shortfall, at 3.32 percentage points, followed by overseas bonds, at 1.97 points; foreign equities, off 1.88%; and domestic equities, down 1.72 percentage points.
The GPIF reported an incremental investment return of 0.21% for the fiscal fourth quarter, with relatively strong gains for foreign equities overcoming declines for overseas and domestic bonds. The fund had reported record gains of 7.98% for the prior quarter.
The fund's latest annual report, also released Friday, showed the commissions GPIF paid to external managers for the fiscal year amounting to ¥40 billion — equivalent to roughly 3 basis points of the entire ¥144.9 trillion portfolio, and little changed from the prior year.
The annual report noted that 3 basis points is well below the level of fees paid by public funds overseas, and said GPIF will work toward more rational compensation levels in the future.
If overall fees were fairly steady, payments to overseas bond managers jumped 37% to ¥12.5 billion — possibly reflecting GPIF's decision to add performance fee arrangements for all managers when it revamped its overseas bond lineup in October 2015.