Japan pension fund on a roll

TOKYO: Japan's public pension fund, the world's largest, recorded investment gains of US$56 billion (RM173.04 billion) in October-December, its second best quarter on record, on the back of strong domestic equities, while the yen's fall helped boost the performance of foreign assets.

Global asset managers and market dealers closely watched the performance of the Government Pension Investment Fund (GPIF) due to the size of its portfolio - which is larger than the economy of Mexico, the world's 14th biggest.

The GPIF recorded an investment gain of 5.14 trillion yen in October-December, significantly higher than the previous quarter's 484 billion yen gain. That translates into a positive return of 4.83 per cent, versus 0.49 per cent in July-September.

The fund, which started operations in 2001, had its best quarter a year ago, in January-March 2012, posting an investment gain of 5.48 trillion yen and a positive return of 5.11 per cent.

The fund's total asset size rose four per cent to 111.9 trillion yen as of end-December from 107.7 trillion yen in September.

The biggest investment gains were in domestic stocks - up 2.07 trillion yen for the fund's best quarter since January-March last year.

The GPIF had a positive return of 13.62 per cent from foreign bonds and 13.78 per cent from foreign equities. However, returns on domestic bonds slipped 0.06 per cent - an investment loss of 35.4 billion yen - for the first quarter since January-March 2011.

The sharp recovery in domestic shares and the weaker yen may give the GPIF a headache as it may need to reallocate its huge portfolio - its weighting of foreign equities is near the allowed ceiling, while its weighting of domestic bonds has slipped to near its minimum limit. Reuters