Unbelievable clownery taking place in Tokyo these days. Last October the Samurai at GPIF decided to double its equity exposure to over 20% of assets, divesting from old boring bonds in the process. Everything was swell, until markets pounded them into dust and absconded with $64 billion of Japanese savings.
The world’s biggest pension fund posted its worst quarterly loss since at least 2008 after a global stock rout in August and September wiped $64 billion off the Japanese asset manager’s investments.
The 135.1 trillion yen ($1.1 trillion) Government Pension Investment Fund lost 5.6 percent last quarter as the value of its holdings declined by 7.9 trillion yen, according to documents released Monday in Tokyo. That’s the biggest percentage drop in comparable data starting from April 2008. The fund lost 8 trillion yen on its domestic and foreign equities and 241 billion yen on overseas debt, while Japanese bonds handed GPIF a 302 billion yen gain.
The loss was GPIF’s first since doubling its allocation to stocks and reducing debt last October, and highlights the risk of sharp short-term losses that come with the fund’s more aggressive investment style. Fund executives have argued that holding more shares and foreign assets is a better approach as Prime Minister Shinzo Abe seeks to spur inflation that would erode the purchasing power of bonds.
“Short term market moves lead to gains and losses, but over the 14 years since we started investing, the overall trend is upwards,” Hiroyuki Mitsuishi, a councilor at GPIF, said at a press conference in Tokyo. “Don’t evaluate the results over the short term, as looking over the long term is important.”
It really was a bad quarter, truth be told. I’m not sold on the idea that pension funds should be so aggressive, unless of course it’s worth betting it all on black. I’m a fan of that approach. Go big or go home. In this case, unfortunately, the kamikazi dive bombers at GPIF went home with a big fat zero, no pun intended.
It’s all fun and games until your book is on fire.
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ha stock “investors” . . . who knew
US issues alert in Afghanistan, there goes my trip to Kabul.