| TOKYO, July 4
TOKYO, July 4 Japan's giant public pension fund
enjoyed another strong financial year as domestic stocks rose,
but its performance was marred by a pullback in the
January-March quarter - just as the fund was cautiously
beginning to seek better returns on its equity investments.
The $1.24 trillion Government Pension Investment Fund, the
world's largest, generated an 8.6 percent return in the year
through March, its third-best ever, helped by a weaker yen and a
47 percent jump in Japanese equities, the fund reported on
GPIF posted a loss of 0.8 percent, however, in the final
three months, its first loss in seven quarters, as the Nikkei
stock average slipped 9 percent.
Prime Minister Shinzo Abe's government has pressed the
enormous fund to seek higher returns for Japan's rapidly ageing
population by pumping more money into stocks and other risky
assets, and away from the paltry returns of Japanese government
bonds. The 10-year Japanese government bond currently yields
less than 0.6 percent.
In the final three months of the financial year GPIF began
putting money into a new stock index that focuses on return on
equity and on companies considered to have strong governance.
GPIF's allocation to the JPX 400 index was 150 billion yen
($1.47 billion) at the end of March.
Global fund managers and other investors closely watch GPIF,
which manages reserves for the national pension system. With a
portfolio bigger than the Mexican economy, it is seen as a
bellwether for other Japanese institutional investors.
The fund's asset value was 126.58 trillion yen at the end of
March, down 0.2 percent from December's record high but up 5
percent for the fiscal year. All four of its asset classes
posted gains for the year, led by a 32 percent return for
The fund had 53.43 percent of its assets in domestic bonds
at the end of March, 15.88 percent in Japanese equities, 10.66
percent in foreign bonds, 15.03 percent in foreign equities and
5 percent in short-term assets.
Founded in 2001, GPIF conducted the most significant
shake-up to its investment strategy in June last year when it
revised its allocation targets, setting a core weighting of 12
percent for Japanese stocks, with a fluctuation of 6 percentage
points allowed either way.
The core weighting for domestic bonds is 60 percent, foreign
stocks 12 percent and foreign bonds 11 percent. GPIF has 5
percent invested in short-term assets.
GPIF's use of active investment in domestic equities fell to
2.57 trillion yen from 3.72 trillion yen in the previous year.
The fund sold a net 4.08 trillion yen during the 12 months,
its fourth straight year as a seller, as it raised cash to cover
($1 = 102.1100 Japanese Yen)
(Editing by William Mallard and Eric Meijer)