February 1, 2019 / 7:26 AM / 2 years ago

UPDATE 1-Japan's GPIF posts record quarterly loss amid market turmoil

(Recasts first paragraph, adds background)

By Junko Fujita

TOKYO, Feb 1 (Reuters) - Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, on Friday posted a record quarterly loss as global stock market turmoil took its toll.

GPIF said it lost 14.8 trillion yen ($136 billion) from its investments in the quarter ended December.

The losses, the largest since GPIF started managing its assets on the market in 2001, followed a plunge in Japan’s benchmark Nikkei average as worries about the escalating Sino-U.S. trade war battered global markets.

The Nikkei fell 17 percent during the quarter.

The results are the negative effect of GPIF’s landmark policy shift made in 2014, when it increased investments in riskier assets such as stocks in the hopes of making better returns.

It reduced its reliance on low-yielding domestic bonds, followed by a government push to spur higher returns on pension investments.

Returns on GPIF’s overall assets, worth 151 trillion yen, was a negative 9.06 percent in the quarter, compared with a 3.42 percent gain in the previous quarter.

GPIF’s Japanese stock assets generated a negative return of 17.6 percent, while its bond investment posted a 1.01 percent positive yield.

As of December, GPIF’s stock holdings accounted for 23.7 percent of its total assets, while its allocation of Japanese bonds took up 28.2 percent.

$1 = 108.8600 yen Reporting by Junko Fujita; Editing by Neil Fullick and Kim Coghill

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