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Gov't pension fund logs second largest ever investment gain in FY 2013

July 4, 2014

The Government Pension Investment Fund said Friday its investment gain totaled 10.22 trillion yen in fiscal 2013, the second highest level on record.

The brisk investment performance came as Japanese stock prices rose amid hopes over Prime Minister Shinzo Abe's economic policies and the yen's fall boosted the value of foreign assets in yen terms.

The GPIF, which manages employee and national pension reserves, said the investment yield during the fiscal year through March 2014 came to 8.64 percent. The record investment gain was 11.2 trillion yen logged in fiscal 2012.

Although pension premiums and benefits are not affected by investment performance, an investment gain is positive for the financial soundness of the nation's pension system.

However, the latest report also showed that the GPIF incurred an investment loss of 1 trillion yen in the January-March quarter, the first loss since the April-June period of 2012, in line with falls in domestic stock prices during the quarter, underlining the fund's vulnerability to rises and falls in the stock market.

Abe's government has asked the GPIF, one of the world's largest institutional investors, to revise its investment portfolio, which is dominated by domestic bonds, as early as this fall. The hope is the GPIF will purchase more risky assets such as stocks to help revitalize the domestic economy.

If the request is materialized, the performance of financial markets will have a greater influence on the pension fund's investment.

By type of assets held by the fund, foreign stocks generated a gain of 4.74 trillion yen and domestic stocks made a gain of 3.19 trillion yen, while foreign bonds racked up a gain of 1.78 trillion yen. These figures were far higher than the gain of 365.3 billion yen from Japanese bonds.

The fund has 126.58 trillion yen in assets under management as of the end of March, of which 4.08 trillion yen was paid to pensioners.

At the end of March, GPIF's investment portfolio was 55.43 percent in domestic bonds, 16.47 percent in domestic stocks, 15.59 percent in foreign stocks, 11.06 percent in foreign bonds and 1.46 percent in short-term assets.

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Source: Japan Economic Newswire

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