Japan’s Government Pension Investment Fund reported Friday a 1.14% investment gain for the Sept. 30 quarter, lifting the value of its world-topping pension portfolio to ¥161.8 trillion ($1.5 trillion).
In comments posted on GPIF’s website, President Norihiro Takahashi said the latest quarter saw central bankers in the U.S. and the European Union respond to concerns about softening economic conditions by cutting interest rates, which served to boost global stock prices.
Domestic stocks, which accounted for almost a quarter of the fund’s allocations as of June 30, provided the biggest boost for GPIF’s portfolio with a gain of 3.34%, followed by foreign bonds, at 1.21%; domestic bonds, up 0.31% and overseas equities, with a 0.11% gain.
For the latest quarter, the fund broke with its usual practice of providing asset allocation figures for the portfolio’s four major asset classes — domestic stocks, overseas stocks, domestic bonds and overseas bonds — ahead of a planned five-year review of GPIF’s asset allocation targets.
A committee of Japan’s Ministry of Health, Labour and Welfare will review asset allocation targets in March and new targets could be announced before the April 1 start of the coming financial year.
Mr. Takahashi said GPIF’s board of governors voted to suspend asset allocation information until release of the pension fund’s annual report for the fiscal year ending March 31, 2020. In past years, the annual report has come out in July.
The previous asset allocation review, announced Oct. 31, 2014, marked the start of a dramatic shift into risk assets from Japanese government bonds, against the backdrop of Prime Minister Shinzo Abe’s plans to revive Japan’s economy with aggressive stimulus policies.
GPIF’s domestic bond allocation plunged to 35% from 60%, while its targets for domestic and overseas equities more than doubled to 25% from 12% each. The review lifted GPIF’s allocation for foreign bonds to 15% from 11%, while eliminating a 5% cash weighting.
The well-telegraphed shift into risk assets the last time around raised the prospect of front-running, a spokeswoman for the fund noted.
Mr. Takahashi described the decision to forgo announcing asset allocation figures in Friday’s announcement as being taken “from the viewpoint of preserving the value” of GPIF’s pension reserves.
The decision by GPIF’s 10-member board of governors wasn't unanimous, with a six-member majority voting to approve, three opposing and one abstaining.
At the end of the June 30 quarter, domestic bonds accounted for 26.93% of GPIF’s portfolio, followed closely by foreign equities, at 26.43%; domestic equities, with 23.50% and foreign bonds, at 18.05%. The remaining 5.09% was held in cash.