By Makiko Yamazaki
TOKYO (Reuters) -Japan’s Government Pension Investment Fund (GPIF) reported on Friday an investment loss of $16 billion in January-March, the first quarterly negative return in two years, as higher U.S. interest rates and the war in Ukraine rattled financial markets.
The world’s largest pension fund’s 1.1% negative return on its overall assets during the three months compares with a 2.81% gain in the previous quarter, it said in a statement.
“Financial markets were very volatile in the quarter,” the fund’s president Masataka Miyazono told reporters, noting Russia’s invasion of Ukraine and inflation in the United States that has led to higher interest rates.
The fund wrote down the value of its Russia-related assets to zero due to sanctions and difficulties in completing transactions. As of March last year, it held Russian assets worth about 220 billion yen ($1.6 billion), representing 0.1% of the total assets.
During the quarter, the Dow Jones Industrial Average dropped 5%, while Japan’s Nikkei stock average fell 3%. The GPIF’s foreign stock portfolio posted a loss of 0.55%, while its Japanese stock portfolio had a loss of 1.22%.
Its foreign and Japanese bond portfolios posted losses of 1.22% and 1.54% respectively.
The fund, which managed 196.6 trillion yen of assets as of end-March, is closely watched by global financial markets because of its mammoth size.
For the year ended March, GPIF had a return of 10.09 trillion yen, or a 5.42% gain. That followed a record annual investment return of 37.8 trillion yen in the previous financial year.
As of end-March, Japanese bonds accounted for 26.33% of its portfolio and foreign bonds accounted for 24.07%. Foreign equities accounted for 25.11% and domestic equities 24.49%.
($1 = 134.9400 yen)
(Reporting by Makiko Yamazaki; editing by David Dolan, Sam Holmes and Edwina Gibbs)
