World’s Top Pension Fund Books ‘Historic’ $339 Billion Return

Shoko Oda and Emi Urabe
·3 min read

(Bloomberg) -- The world’s biggest pension fund posted a record return for the fiscal year ended in March, boosting its assets to the highest on record and beating its benchmark for the first time in seven years.

Japan’s Government Pension Investment Fund booked a gain on its investments of 25%, or 37.8 trillion yen ($339 billion), in the 12 months ended March, the most since the fund started managing the nation’s pension reserves in 2001. Overseas stocks were its best-performing asset in the period, returning 59.4%, followed by a 41.6% return in domestic stocks. Overseas debt gained 7.1%, while Japanese debt lost 0.7%. The fund’s return exceeded its compound benchmark by 0.3%.

GPIF President Masataka Miyazono has yet to oversee a negative quarter since he took the top post in April 2020, as the fund extended its recovery from a record 17.7 trillion yen loss during the first three months of last year due to the global equity rout. The fourth straight quarter of gains lifted the fund’s assets to a record 186.1 trillion yen.

Speaking in Tokyo, Miyazono said the return was “historically, especially high,” though he cautioned the markets had seen a “tailwind” from the boom in equities throughout the year, and that future years would see headwinds too. He didn’t expect such a one-sided return on stocks this fiscal year, he added.

The MSCI World Index rallied 52% during the fiscal year ended March, while Japan’s benchmark Topix index rebounded 39%. Yields on 10-year Treasuries climbed 107 basis points to 1.74% and those of Japanese government debt added about 12 basis points to 0.12%. The dollar strengthened almost 3% against the yen during the fiscal year.

For the three months ended March, the fund returned 5.7%, or 10 trillion yen. Japanese stocks returned 9.3% during the period, during which the Nikkei 225 briefly topped 30,000 for the first time in more than 30 years. Foreign stocks returned 12%, while domestic and foreign debt lost 0.4% and returned 1.6%, respectively.

“Given the market changes seen in fiscal 2020, there were many opportunities to review asset ratios, giving GPIF a lot of positive experiences in managing based on the basic portfolio,” wrote Eiji Ueda, the fund’s chief investment officer, in a statement.

Investments in ESG indexes reached a record high of 10.6 trillion yen as of the end of March, rising 86% from the previous year. The fund added two new foreign equity ESG indexes last December. The GPIF has been seen as a leader in socially responsible investing under former chief investment officer Hiromichi Mizuno, but since his departure the fund has been noticeably less vocal on the subject.

“It’s likely this number will continue to increase,” Naoki Fujiwara, chief fund manager at Shinkin Asset Management, said of the jump in ESG investments. “It seems that expectations for ESG are continuing to rise in Japan’s stock market as well. It’s not just pension funds, but money from institutional investors and investment trusts that’s also flowing into these names, creating a premium.”

Eiji Hirano, the former chairman of the board of governors, told Bloomberg News recently he saw signs of an ESG “bubble,” and said the fund needed to evaluate how much socially responsible investing really adds to returns. The GPIF plans to issues its annual report on ESG activity later this summer, Miyazono said.

(Updates with details starting in fourth paragraph)

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting

Recommended Stories

  • Japan's GPIF posts record annual return on equity rally

    Japan's Government Pension Investment Fund (GPIF) on Friday declared a record investment return of 37.8 trillion yen ($338.8 billion) for the year ended March 31, raking in the benefits of a robust rally in global stock markets. GPIF heavily relies on a passive index-tracking strategy so its returns usually mirror market movement. Japan's Nikkei stock index rose 55% in the last financial year while the Dow Jones Industrial Average advanced more than 50%, as market sentiment rose in tandem with progress made in pandemic-busting vaccination programmes worldwide.

  • FBI Muscles Up Against Hackers With Breaches Going ‘Bananas’

    (Bloomberg) -- For the last several years, FBI agents debated turning the tables on hackers by remotely accessing breached computer networks and booting out the attackers caught in mid-hack.They got their chance earlier this year after state-backed Chinese hackers compromised thousands of private Microsoft Exchange email servers. In response, an FBI special agent petitioned a Houston federal judge on April 9 for authorization to remotely access hundreds of hacking victims’ computer networks and

  • Why the Fed is getting worried about the most boring thing in crypto

    Stablecoins are meant to be the least volatile part of crypto. And yet, the Fed is increasingly worried about the risks they pose to the traditional financial system.

  • Big Tech's push into India's financial sector raises concerns, says central bank

    Plans by Big Tech to foray further into India's financial sector pose risks for traditional banks as the tech firms have the potential to become dominant players in financial services, the central bank said. The plans will also create governance-related challenges for regulators, the Reserve Bank of India (RBI) wrote in its bi-annual financial stability report on Thursday. Major technology firms "straddle many different lines of business with sometimes opaque overarching governance structures," it said.

  • SoftBank Gets Over $7 Billion in Jumbo Offshore Bond Deal

    (Bloomberg) -- SoftBank Group Corp.​​​​​​ priced the second-biggest offshore bond deal from Asia this year, raising about $7.35 billion in a dual-currency debt offering.The Japanese technology giant sold $3.85 billion of dollar-denominated debt and 2.95 billion euros ($3.5 billion) of notes on Wednesday, making it second in size only to a deal by Nippon Telegraph & Telephone Corp. in February. It was the first overseas debt deal by SoftBank since 2018.SoftBank posted the biggest-ever quarterly p

  • HK bourse says working with regulators on southbound leg of China Bond Connect

    Hong Kong Exchanges and Clearing (HKEX) is "working closely" with regulators on a southbound leg of the Bond Connect programme to expand Chinese investors' access to global bond markets, the bourse operator's chief executive said on Friday. Nicolas Aguzin's comments, made in a speech to an online summit, come after Hong Kong Chief Executive Carrie Lam said she looked forward to the "early implementation" of the southbound Bond Connect, in a speech to the British Chamber of Commerce on June 17. The northbound leg of Bond Connect, launched in July 2017, expanded global investors' access to the Chinese onshore bond market, the world's second-largest.

  • 400 jobs lost as SC company announces consolidation of 4 manufacturing plants

    The company delivered the news to its South Carolina employees Thursday.

  • NVIDIA's Stock Split Is Almost Here: Here's What You Should Know

    In late May, graphics chip-maker NVIDIA (NASDAQ: NVDA) surprised shareholders with an announcement that it would execute a four-for-one stock split. The stock split is finally almost here. Shares of NVIDIA have notably soared recently.

  • These 2 Stocks Are in Rally Mode: Here’s How High They Can Go

    By appearances, we’re in a period of sustained and steady growth. The main indexes are showing rising trends; the S&P 500 and the NASDAQ both reached new record levels in recent sessions, while the Dow Jones average is hovering just below its all-time high. A combination of low interest rates and a general feeling that inflationary pressures are temporary are helping to buoy stocks. The broad equity gains give investors a wide choice in growth stocks. Plenty of companies have seen their shares m

  • 1 Great Income Stock That Could Double Its Dividend

    As a general rule, stock price growth and dividend income tend to be hard to find in the same stock. High dividend stocks tend to be in mature businesses like public utilities, which grow more or less in line with the overall economy. Stocks that are in growth mode typically eschew dividends, preferring to use precious capital to grow the business.

  • Why AMMO Shot 11% Higher Today

    What happened Shares of AMMO (NASDAQ: POWW) soared 11.4% on Wednesday after reporting fiscal fourth-quarter earnings that showed sales rocketed 409% from the year-ago period, while adjusted profits surged 296% higher.

  • AT&T (NYSE:T) Has Affirmed Its Dividend Of US$0.52

    AT&T Inc. ( NYSE:T ) will pay a dividend of US$0.52 on the 2nd of August. This means the annual payment is 7.2% of the...

  • This Dividend King Is About to Get a Big Boost From Reopening

    With a unique approach to a vital food-distribution category, this Dividend King is only just starting its recovery.

  • Big Banks Launch a Flurry of Dividend Increases: Here Are the Winners and Losers

    Following successful stress testing, banks will have much more autonomy to return capital to shareholders.

  • Don't Miss These 10 Dividend Stocks That Pay Monthly Dividends

    When it comes to investing, most look at how much in dividends they can receive. If you want more for your investment, here are ten dividend stocks that pay monthly.

  • Buy These 3 Stocks Before They Pop Over 50%, Say Analysts

    The rising inflation rates is a key worry in the economic situation right now. With prices going up, dollars don’t go as far – it’s an interaction that threatens to derail consumer spending, the engine of the US economy. Investors got some clarity in June, however, after the latest FOMC meeting. The Fed had long kept an ‘inflation target’ of 2%; with inflation running more than double that, there was much speculation that the Fed would take an aggressive stance against it. Such a stance would ne

  • 3 Stocks That Have Doubled This Year -- and Could Do It Again

    Through June 29, the S&P 500 is up 14.3% year to date, with the Nasdaq and Dow Jones Industrial Average not far behind. The gains have been widespread after a gap between growth stocks and value stocks earlier in the year narrowed. Not surprisingly, the successful vaccine rollout and the economic reopening have been good news for investors, and even pandemic winners have mostly held their ground in 2021.

  • Bank of America Pulling Back from Multi-Decade Resistance

    The current decline in interest rates looks like a countertrend impulse, suggesting yields and bank profits will go higher in coming months.

  • Is NVIDIA Headed to $900? 3 Things to Know

    Shares of NVIDIA (NASDAQ: NVDA) have climbed by 31% since the semiconductor company unveiled its newest data center chips at its investor day on April 12. The analysts covering NVIDIA for Bank of America and Raymond James have both set a $900 price target on the stock,  citing the company's momentum in the data center segment. What's more, NVIDIA recently received good news on its efforts to get its $40 billion acquisition of SoftBank Group's (OTC: SFTBF) (OTC: SOBK.Y) Arm Holdings approved in the U.K., with three major Arm customers giving the deal a thumbs-up.

  • Goldin Auctions Sells to Billionaire Steve Cohen Group in Collectibles Boom

    Not only is sports memorabilia hot—sports memorabilia companies are on fire, too. Sports collectibles auction pioneer Ken Goldin has sold Goldin Auctions to Collectors Holdings, a group owned by New York Mets owner Steve Cohen, hedge fund billionaire Dan Sundheim and venture capital investor Nat Turner. Goldin, who founded his self-named auction house in 2012, […]