Equity rout costs

worlds biggest
pension fund
$64 bn in losses
BLOOMBERG The retirement funds
30 November stock investments are largely
passive, meaning returns typ-
The worlds biggest pension ically track benchmark
fund posted its worst quar- gauges. GPIFs Japan equities
terly loss since at least 2008 slid 13 per cent, the same
after a global stock rout in decline posted by the Topix
August and September wiped index, as Chinas yuan deval-
$64 billion off the Japanese uation and concern about the
asset managers investments. potential impact if the
The 135.1 trillion yen ($1.1 Federal Reserve raises inter-
trillion) Government Pension est rates roiled global mar-
Investment Fund lost 5.6 per kets. The fund lost 11 per cent
cent last quarter as the value on its foreign equity holdings.
of its holdings declined by 7.9 Shares have rebounded since
trillion yen, according to doc- September 30, with the Topix
uments released Monday in climbing 12 per cent.
Tokyo. Thats the biggest per The fund can hedge its
centage drop in comparable foreign-exchange risk if need-
data starting from ed, Mitsuishi said,
April 2008. The GPIF hadnt while declining to
fund lost 8 trillion posted a comment on
yen on its domes- quarterly loss whether GPIF had,
tic and foreign since the three or plans to start
equities and 241 months doing so.
billion yen on through March GPIFs 0.6 per
overseas debt, 2014 cent return on
while Japanese Japanese debt
bonds handed GPIF a 302 bil- compares with an 0.9 per
lion yen gain. cent advance on a
The loss was GPIFs first Bloomberg gauge of the
since doubling its allocation nations sovereign bonds
to stocks and reducing debt during the period. The
last October, and highlights funds foreign debt invest-
the risk of sharp short-term ments lost 1.3 per cent dur-
losses that come with the ing the quarter, as the yen
funds more aggressive strengthened 2.2 per cent.
investment style. Fund exec- GPIF hadnt posted a
utives have argued that hold- quarterly loss since the three
ing more shares and foreign months through March 2014.
assets is a better approach as The most recent results
Prime Minister Shinzo Abe included returns from a port-
seeks to spur inflation that folio of government bonds
would erode the purchasing issued to finance a fiscal
power of bonds. investment and loan pro-
Short term market moves gram, with GPIF providing
lead to gains and losses, but such figures since 2008. If
over the 14 years since we those are stripped out, the
started investing, the overall drop was the funds third-
trend is upwards, Hiroyuki worst on record, exceeded
Mitsuishi, a councillor at only by declines in the
GPIF, said at a press confer- depths of the 2008 global
ence in Tokyo. Dont evalu- financial crisis and the after-
ate the results over the short math of the September 11,
term, as looking over the long 2001 terror attacks.
term is important. Norways sovereign
GPIF had 39 per cent of wealth fund lost 4.9 per cent
its assets in Japanese debt at in the third quarter, with
September 30, and 21 per equity investments sliding
cent in the nations equities, 8.6 per cent, its manager
according to the statement. said on October 28.
That compares with 38 per The Canada Pension Plan
cent and 23 per cent three Investment Board delivered
months earlier, respectively. a 1.6 per cent gain in the
The fund had 22 per cent of same period, with the funds
its investments in foreign President Mark Wiseman
stocks at the end of crediting diversification
September, and 14 per cent across assets and geogra-
in overseas bonds. phies for the result.