Japan's Government Pension Investment Fund, Tokyo, reported a 1.5% gain for its fiscal year ended March 31.
The gain, which was short of the 6.9% increase for fiscal year 2018, came despite double-digit losses for both Japanese and foreign equities for the third fiscal quarter. The pension fund ended its fiscal year with ¥159.2 trillion ($1.47 trillion) in assets.
Japanese and foreign equities returned -5.1% and 8.1%, respectively, in the fiscal year ended March 31. The results came after stock prices in Japan, the U.S. and Europe retreated in the quarter ended Dec. 31, a period in which Japanese and foreign equities reported losses of 17.6% and 15.7%, respectively.
For the fiscal year ended March 31, Japanese and foreign bonds returned 1.4% and 2.7%, respectively, while short-term assets were flat.
The GPIF's recovery from a record ¥14.8 trillion loss during the October-December quarter comes as Japan heads into this month's national elections, where social security ranks as the most important issue in media polls. Global equities and bonds rallied in the first three months of 2019 as U.S. and European central banks turned dovish amid U.S.-China trade tensions.
Japanese and foreign equities returned 7.6% and 13.9%, respectively, in the quarter ended March 31. Japanese and foreign bonds returned 1.1% and 3.2% respectively, during the same period.
"While interest rates remain low, investments that can generate returns are getting limited," said Hiroshi Matsumoto, head of Japan investment at Pictet Asset Management Ltd. in Tokyo. "In such an environment, we think there is no other choice but to take on risks in assets such as stocks and alternative investments if you want to improve returns."
Bloomberg contributed to this story.