Stock rally and weak yen boost Japan pension fund

PUBLISHED : Wednesday, 03 July, 2013, 12:00am
UPDATED : Wednesday, 03 July, 2013, 4:48am

Japan's Government Pension Investment Fund, the world's largest manager of retirement savings, posted a record 10.2 per cent annual return as stocks surged and a weaker yen boosted the value of overseas assets.

The pension fund held 120.5 trillion yen (HK$9.39 trillion) of assets at the end of March, boosted by a 29 per cent surge in overseas equities and a 23 per cent advance in Japanese stocks over its financial year, it said yesterday.

The total return is the biggest since 2006, when the fund was established in its present form by the government.

The fund said on June 7 that it was cutting local bond holdings to buy more stocks and foreign securities and planned to leave its asset allocations at the new levels until at least March 2015.

The shift towards higher-yielding assets comes as the manager prepares to fund retirements in the world's oldest population.

"Returns from Japanese stocks were positive, and the weaker yen helped, and stocks abroad rose, too," the fund's president, Takahiro Mitani, said on June 21.

"Last year, with all domestic and foreign assets being positive, was a very unusual case. Normally when stocks rise, bonds fall and vice versa. That's why we invest in various assets - so if somewhere is bad, somewhere else is good."

Overseas bonds returned 18 per cent in the year, while domestic bonds yielded 3.7 per cent, the fund said.

The Topix index, the country's broadest equity measure, rose 21 per cent in the financial year to March, the biggest gain since 2010.

Benchmark 10-year government bond yields have swung from a record low of 0.315 per cent to as much as 1 per cent since the Bank of Japan announced monetary easing measures in April.

The GPIF is the biggest pension fund in the world by assets, followed by Norway's government pension fund, according to the Towers Watson Global 300 survey in August.

The Japanese fund did not alter the structure of its holdings during the 2008 financial crisis or in response to the 2011 earthquake and nuclear disaster.