Japan's GPIF reports 3.88% loss for latest quarter

Japan's Government Pension Investment Fund reported an investment loss of 3.88%, or $52 billion, for its fiscal first quarter ended June 30, with a rising yen and falling domestic stock prices pushing the Tokyo-based giant's portfolio below ¥130 trillion ($1.27 trillion) for the first time since the close of 2014.

Following a 3.52% investment loss for the quarter ended March 31, the fund's latest returns marked a second consecutive quarter of steep losses, amid growing investor doubts as to whether Japanese policymakers have the tools needed to pull the country's economy out of a prolonged period of deflationary low growth.

GPIF's investment portfolio stood at ¥129.7 trillion as of June 30, down from ¥134.7 trillion at the end of the prior quarter and, for the first time, dipping below the level that prevailed on Oct. 31, 2014, when the fund adopted a higher-risk, higher-reward asset allocation plan.

On the argument that Prime Minister Shinzo Abe's aggressive economic stimulus plans made it imperative to shift assets out of low-yielding Japanese government bonds in favor of equities and overseas bonds, the fund slashed its target allocation for JGBs to 35% from 60%, while more than doubling its targets for domestic and overseas equities each to 25% from 12%. GPIF's target for overseas bonds, meanwhile, rose to 15% from 11%.

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