Japan’s Largest Pension Fund Bleeding Money as Global Economic Turmoil Seeps Deep

As the global economy continues to fight for resilience, the world’s largest pension fund, the Japanese Government Pension Investment Fund (GPIF) has recorded another quarter of loss as unveiled today. According to a report from CNBC, the GPIF reported a 0.97% loss on its investments in the quarter that ended December 31, 2022.

The loss, which has a monetary value of 1.85 trillion yen ($14.3 billion) comes off as the Fund’s fourth consecutive plunge, the first time in about 20 years. According to the Fund, the major losses it incurred were in its foreign bonds which dropped 5.3% for the quarter. The domestic bonds returned a moderate loss of 1.7% within the same period. 

Not all of its units ended in the red as its domestic stock portfolio recorded a 3.2% gain. This appreciation was not complemented by the foreign stock portfolio which dropped slightly.

The global economy has been under intense heat since the beginning of last year. This immense economic jab came as an aftermath of the COVID-19 pandemic era. It was then further compounded by the outbreak of a regional war between Russia and Ukraine. This war not only precipitated an energy crisis but also fueled a global strain in the supply chain.

As a member of the G7, Japan has been at the forefront of the impacts of these global economic strains, This accounts for one of the reasons why the GPIF is currently facing a financial onslaught.

Per the latest quarterly loss, the GPIF’s total losses for the first three quarters of the fiscal year now stand at 3.71%, or 7.32 trillion yen. Amid the broader onslaught in the firm, its cumulative Assets Under Management (AUM) now stand at 189.9 trillion yen.

Japan’s Pension Fund Losses: Mixed Global Reality

While the Japanese government’s pension fund, the largest in the world posted its losses, there are a number of global business outfits that are recording similar losses. American multinational tech giant Apple Inc (NASDAQ: AAPL) reported total revenue of $117.15 billion for its previous quarter, a figure that pales compared to the $121.10 billion estimated, down 5.49% year-over-year consensus from Refinitiv.

Companies are taking a battery around the world with a number of pension funds reeling from losses from bad investments. Notably, with the losses incurred by risky bets in the digital currency ecosystem following the spat of bankruptcies have made pension funds reassess their investment strategies.

Canada’s largest pension fund, CPP Investments (CPPI) has come out to boldly affirm it will no longer be making bets in the crypto world. Without a defined reason, many keen observers could understand the decision.

With GPIF taking a hit from the hiked interest rate as instituted by the US Federal Reserve last year, the Fund may also benefit from the recent dovish hikes.

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