GPIF has worst loss since 2020 as yen strength hits assets

Government Pension Investment Fund (GPIF) posted its biggest quarterly loss since 2020 as a rebound in the yen erased gains on overseas securities and domestic stocks declined.
GPIF, one of the world’s largest state pension funds, incurred losses in three of four major asset classes — foreign stocks and bonds as well as Japanese equities — with only domestic debt generating a positive return. The result may damp speculation the fund will increase stock holdings in an attempt to boost overall returns next year when it sets a new model portfolio.
“When the GPIF raised its allocation target to domestic stocks in the past, it started increasing domestic equity holdings ahead of the official policy change,” said Hidenori Suezawa, a fiscal analyst at SMBC Nikko Securities. “Today’s results at least had no hint of that happening.”
The fund saw a loss of 3.6% in the three months through September, with assets totaling ¥248.2 trillion ($1.6 trillion), it said in Tokyo on Friday. Holdings of Japanese bonds increased to 26.74% of total assets from 25.85% in June, while domestic stocks decreased to 23.98% from 24.37%.
The weakness of currencies versus the yen weighed on overseas investments, with losses of 5.4% for stocks and 5.5% for bonds. Japanese stocks dropped 4.9%, while domestic debt returned 1.4%.
During the quarter, the MSCI All-Country World Index of global stocks gained 6.2% and the S&P 500 added 5.5% as the Topix lost 5.8%. Yields on 10-year Treasurys dropped more than 60 basis points, while benchmark Japanese bond yields shed almost 20 basis points. The dollar fell 11% against the yen.