rtmark
LearnBonds.com

World’s largest pension fund books $165bn record loss amid pandemic

The Japanese Government Pension Investment Fund (GPIF) announced a record $164bn loss for the first quarter of 2020 after foreign stock prices plunged amid pandemic fears.

The government-managed fund, which currently oversees around $1.4trn (¥150.63trn) in assets for Japanese citizens, saw its portfolio drop by around $164.7bn (¥17.7trn) as a result of the February-March sell-off that wiped off more than $16trn from global stock markets.

The fund’s significant exposure to foreign shares was the primary cause of the sharp quarterly drop, as the GPIF allocated around 25% of its funds in equity instruments, even though domestic shares also contributed to the loss, as they comprise another 25% of the fund’s entire portfolio.

During the first quarter of the year, the fund recorded $93bn (¥10.2trn) and $69bn (¥7.4trn) in losses on foreign and domestic equities respectively, while bonds performed a little better, with foreign bonds generating $1.07bn (¥115bn) in earnings while domestic bonds lost $1.72bn (¥185bn).

“The decline in domestic and foreign equities led to a negative return for the fiscal year”, said the president of GPIF Masataka Miyazono, citing that “the global coronavirus pandemic led to investors taking a risk-off stance”.

The head of the pension fund also acknowledged that the portfolio was heavily exposed to “equity volatility”, but he justified the decision saying that is “alright for now” citing a “low-yield environment” that makes less risky investment alternatives – such as bonds – unattractive for the fund’s goals.

Despite the size of the losses, they were expected and analysts said that the pension fund’s portfolio should have gained ground between April and June, following the recovery that most stock markets around the world saw during that period.

However, Miyazono also said that “in the long run, the pension fund should correct the allocation of equities” to reduce the volatility of its returns.

Since the month of April, the fund has set an equally-weighted portfolio that will devote 25% of its assets to each class it invests in – domestic and foreign stock and bonds – even though the actual size of the allocations may be different depending on how the value of the financial instruments that comprise the portfolio fluctuates over time.

Trusted & Regulated Stock & CFD Brokers

What we like

  • 0% Fees on Stocks
  • 5000+ Stocks, ETFs and other Markets
  • Accepts Paypal Deposits

Min Deposit

$200

Charge per Trade

Zero Commission

Rating

64 traders signed up today

Visit Now

75% of investors lose money when trading CFDs.

Available Assets

  • Total Number of Stocks & Shares5000+
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Futures
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • DAX Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire Transfer
  • Credit Cards
  • Bank Account
  • Paypall
  • Skrill
  • Neteller

What we like

  • 0% Commission
  • Trade Stocks Via CFDs
  • Authorized & regulated by the FCA

Min Deposit

$100

Charge per Trade

Zero Commission

Rating

Visit Now

80.5% of retail investor accounts lose money when trading CFDs with this provider.

Available Assets

  • Total Number of Stocks & Shares+2000
  • US Stocks
  • German Stocks
  • UK Stocks
  • European
  • ETF Stocks
  • IPO
  • Funds
  • Bonds
  • Options
  • Future
  • CFDs
  • Crypto

Charge per Trade

  • FTSE 100 Zero Commission
  • NASDAQ Zero Commission
  • Dax Zero Commission
  • Facebook Zero Commission
  • Alphabet Zero Commission
  • Tesla Zero Commission
  • Apple Zero Commission
  • Microsoft Zero Commission

Deposit Method

  • Wire transfer
  • Credit Cards
  • Bank Account
  • Paypal
  • Skrill
All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Alejandro Arrieche

Alejandro is a financial writer with 7 years of experience in financial management and financial analysis. He writes technical content about economics, finance, investments, and real estate and have also assisted financial businesses in building their digital marketing strategy. His favorite topics are value investing and financial analysis.