Japan's Government Pension Investment Fund on Friday reported a 1.68% gain for its fiscal first quarter ended June 30, lifting the value of the Tokyo-based fund's investment portfolio to ¥158.6 trillion ($1.43 trillion).
GPIF President Norihiro Takahashi said in comments posted on the GPIF website that economic momentum at home and abroad proved strong enough to lift developed market stocks during the quarter despite uncertainties weighing on market participants over U.S. trade policy.
And with U.S. central bank tightening boosting the dollar vs. the yen, the allocations to overseas and domestic stocks and bonds all delivered positive returns for the quarter, Mr. Takahashi said.
The portfolio's investment gain for the three-month period came to ¥2.6 trillion, led by a ¥2 trillion contribution from the fund's allocation to foreign equities — largely on the strength of foreign-exchange valuation gains.
Domestic equities provide the next largest contribution, at roughly ¥420 billion, followed by foreign bonds, with ¥134 billion, and domestic bonds, ¥61 billion.
As of June 30, GPIF's biggest allocation remained to domestic bonds, at 27.1%, but domestic and foreign equities were close behind, at 25.6% and 25.3% respectively.
The pension fund's allocation to foreign bonds, meanwhile, stood at 15.3%, closing for the first time above the fund's target allocation of 15%.
The latest allocations leave domestic bonds well below their target weighting of 35%, with domestic and foreign equities just above their targets of 25% each.
Over the quarter, GPIF's cash holdings dropped to 6.7% of the portfolio from 8.7%, effectively putting more than $28 billion to work in financial markets.
At the close of the March 31 quarter, the GPIF reported allocations of 27.5% to domestic bonds, 25.1% domestic equities, 23.9% foreign equities and 14.8% foreign bonds.
Meanwhile, the GPIF's allocations to alternatives — included, depending on the specific strategies used, in the fund's tallies for domestic or foreign stocks or bonds — stood at 17 basis points as of June 30, still well below the permitted ceiling of 5% but up roughly ¥60 billion from the prior quarter.