This Fund Manager Just Lost US$51 Billion
The world’s biggest pension fund posted the worst annual performance since the global financial crisis, with losses exacerbated by unfavorable currency moves and a foray into equity markets.
Japan’s $1.3 trillion Government Pension Investment Fund lost 3.8 percent in the year ended March 31, or 5.3 trillion yen ($51 billion), the retirement manager said in Tokyo.
That’s the biggest drop since the fiscal year ended March 31, 2009. GPIF lost 10.8 percent on domestic equities and 9.6 percent on shares in other markets, while Japanese bonds handed the fund a 4.1 percent gain.
The annual loss — GPIF’s first since doubling its allocation to stocks and paring domestic bond holdings in October 2014 — came during a volatile stint for markets.
Japanese shares sank 13 percent in the year through March while the yen climbed 6.7 percent against the dollar, reducing returns from overseas investments. The only asset class to post a profit was local debt, which jumped in value as the Bank of Japan’s adoption of negative interest rates sent yields tumbling.
“The results are painful,” said Masahiro Ichikawa, a senior strategist at Sumitomo Mitsui Asset Management Co. in Tokyo. “Because it’s a pension fund, they need to have a long-term outlook, so I don’t think we can say yet that they took on too much risk. It was a harsh investment environment for most of us.”