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business

Gov't pension fund posts ¥9.1 tril profit in 4th quarter

11 Comments
By Takashi Umekawa

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, has reported a profit of 9.1 trillion yen ($84.4 billion) in January-March, swinging from a record loss in the prior quarter, thanks to an upturn in stock markets.

The fund, which managed 159.2 trillion yen of assets as of end-March, had quarterly profits of 2.7 trillion yen on domestic stocks and 5.1 trillion yen on foreign equities, its earnings results showed.

Japan's Nikkei stock average rose 8.4% during the quarter, boosted by speculation the U.S. Federal Reserve's next policy move would be an interest rate cut.

The GPIF had suffered a record 14.8 trillion yen loss in the three months ended in December as worries about the escalating U.S.-China trade war battered global markets.

Given the ultra low interest rate environment in Japan, the fund has retreated from unprofitable domestic bonds and pushed into foreign assets.

It had 26.3% of its portfolio in Japanese bonds as of end-March, compared with 36.15% in September 2016 when the Bank of Japan launched its policy of pinning 10-year government bond yields around 0%.

By contrast, the GPIF’s foreign bond holdings accounted for 16.95% of its portfolio in the latest quarter. It bought a net 630 billion yen of foreign bonds during the quarter, according to a Reuters calculation based on the fund’s results.

The fund allocated 23.55% to domestic stocks and 25.53% to foreign stocks.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

11 Comments
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I smell 'elections' around the corner (eye-roll)

4 ( +6 / -2 )

"The fund, which managed 159.2 trillion yen of assets as of end-March, had quarterly profits of 2.7 trillion yen on domestic stocks and 5.1 trillion yen on foreign equities, its earnings results showed."

I smell money baby and lot of it.

LOL

-4 ( +1 / -5 )

I hope they aren't paying hefty commissions to financial advisers or other middlemen.

All anyone - including the pension corporation - needs to do is buy a cheap index fund tracking the S&P and a smaller one tracking a major bond index. And then do nothing, and pay no one. And then watch your wealth grow over time.

2 ( +2 / -0 )

I smell money baby and lot of it.

Just not enough to cover the average person's retirement despite them having paid into the system their entire working lives.

2 ( +2 / -0 )

Have they realized this profit or is it just on paper, waiting to disappear with the next stock market crash?

2 ( +3 / -1 )

Well done!

0 ( +1 / -1 )

 waiting to disappear with the next stock market crash?

If you had invested in the market in 2006, only to see about 40% of the value of your holdings disappear by the end of 2008, then today, you'd still be way, way ahead.

0 ( +1 / -1 )

@JeffLee

Yes, but if you had done the same thing in 1988 you would still be way, way behind... 41 years later.

-1 ( +1 / -2 )

Yes, but if you had done the same thing in 1988 you would still be way, way behind... 41 years later.

How do you figure that? The S&P 500 was around 270 in 1988. Today, it's nearly 3,000. That's a 1,000% return. I'd call that being "way, way ahead."

2 ( +2 / -0 )

This is the sole topic on which JeffLee and I agree 100%. Everyone should listen to Jeff in this instance because I am right!

Seriously though, these quarterly reports are pretty pointless because the headlines simple reflect short term market moves, but over the long run, at least with foreign stocks exposure, chances are very good that periodic investments will have increased in overall value when it comes time to cash out.

Jeff has this all right. Just be prepared to sit through some stock markets crashes along the way.

1 ( +1 / -0 )

So, what are "they" gonna do with all that money?

Increase the retirement for "Mr and Mrs Watanabe" (as well as for others)?

And not just this year or the next, but for many years to come?

I got my doubts. Maybe some of that extra cash will mysteriously disappear in some dark channels?

0 ( +0 / -0 )

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