Japan’s pension fund buoyed by Trump rally

The world’s largest pension fund delivered a return of 7.98 per cent in the final quarter of 2016 as the Trump rally sent global asset prices soaring in yen terms.

Japan’s Government Pension Investment Fund, which manages public pension money for millions of workers, returned ¥10.5tn ($91.9bn) during the quarter. Its value rose to ¥144.8tn ($1,268.5bn).

The surge in value helps to validate Japanese prime minister Shinzo Abe’s 2014 decision to shift the GPIF into risky assets, including foreign equities, and gives him another reason to thank new US president Donald Trump.

Increasing risk in the GPIF portfolio is meant to help Japan meet the huge pension bills from its aging population. But there is intense political sensitivity about any losses, even due to quarterly market volatility, because of the impression of speculating with public money.

The GPIF made 15.2 per cent in the quarter on its holdings of domestic equities, slightly ahead of a 15 per cent rise in the Topix index, and 16.5 per cent on its portfolio of foreign stocks. Foreign bond holdings returned 8.8 per cent, reflecting the yen’s fall, while domestic bonds lost 1.1 per cent.

After three quarters of its fiscal year, which runs to the end of March, the GPIF was up 5.7 per cent. That follows a 3.9 per cent fall the previous year.