Japan's pension fund posts best returns in three years

The world’s biggest pension fund posted its best annual gain in three years despite a loss during the final quarter of its business calendar.

Japan’s Government Pension Investment Fund returned 6.9 per cent, or 10.1 trillion yen ($91 billion), in the year ended March 31, with assets totaling 156.4 trillion yen, it said in Tokyo. Domestic stocks were the fund’s best performing investment, adding 5.5 trillion yen, followed by a 3.5 trillion yen increase in overseas shares. Domestic bonds gained 362bn yen, while overseas debt rose 674bn yen.

Six quarters of gains boosted assets to a record at the end of 2017. The GPIF incurred losses during the first three months of this year as investor sentiment turned from optimism over US tax cuts to fears of a trade war. A global equity rout and plunge in the US Treasuries in its final fiscal quarter kept the fund from beating a record 12 per cent annual gain set three years ago.

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“The environment is favorable for stock investments for the time being as the global economy remains solid and inflation is benign,” said Naoki Fujiwara, chief fund manager for Shinkin Asset Management in Tokyo. “Yet, from a long-term perspective, the ratio of risk assets in its portfolio may be too much.”

The GPIF doubled stock holdings and cut bonds as part of a strategy revamp in 2014 with the assumption that rising prices would erode the spending power of Japan’s low-yielding debt. Since then, the shift has helped the fund generate a positive return for three out the past four fiscal years.

“Domestic and overseas stocks rose largely supported by a robust economic environment and solid corporate earnings, in addition to” political stabilisation in Europe and expectations over an economic boost from a US tax cut, GPIF President Norihiro Takahashi said in a statement. “However, toward the end of the fiscal year, domestic and overseas stocks narrowed their gains on uncertainties over US trade policy, while the yen strengthened against the dollar.”

Trade friction between the US and China has become a big issue when assessing the investment environment, Mr Takahashi said. In addition, he said the fund is cautious about investing in Japanese bonds with a maturity less than 10 years because of negative yields.

During the fiscal year, the Topix index gained more than 13 per cent while benchmark Japanese government bonds were little changed. The MSCI All-Country World Index of global stocks rose 13 per cent.

Japan’s currency strengthened 4.8 per cent against the dollar and US Treasuries returned 0.4 per cent.

GPIF has a general target to keep 25 per cent of its basic portfolio in domestic stocks and 25 per cent in overseas shares. The permissible range of deviation is 9 per cent for local equities and 8 per cent for stocks abroad. The fund holds the majority of its stock investments in strategies that track indexes.

Alternative assets accounted for 0.13 per cent of GPIF holdings, below the allowed limit of 5 per cent.

Cry Macho

Director: Clint Eastwood

Stars: Clint Eastwood, Dwight Yoakam

Rating:**

Why does a queen bee feast only on royal jelly?

Some facts about bees:

The queen bee eats only royal jelly, an extraordinary food created by worker bees so she lives much longer

The life cycle of a worker bee is from 40-60 days

A queen bee lives for 3-5 years

This allows her to lay millions of eggs and allows the continuity of the bee colony

About 20,000 honey bees and one queen populate each hive

Honey is packed with vital vitamins, minerals, enzymes, water and anti-oxidants.

Apart from honey, five other products are royal jelly, the special food bees feed their queen

Pollen is their protein source, a super food that is nutritious, rich in amino acids

Beewax is used to construct the combs. Due to its anti-fungal, anti-bacterial elements, it is used in skin treatments

Propolis, a resin-like material produced by bees is used to make hives. It has natural antibiotic qualities so works to sterilize hive, protects from disease, keeps their home free from germs. Also used to treat sores, infection, warts

Bee venom is used by bees to protect themselves. Has anti-inflammatory properties, sometimes used to relieve conditions such as rheumatoid arthritis, nerve and muscle pain

Honey, royal jelly, pollen have health enhancing qualities

The other three products are used for therapeutic purposes

Is beekeeping dangerous?

As long as you deal with bees gently, you will be safe, says Mohammed Al Najeh, who has worked with bees since he was a boy.

“The biggest mistake people make is they panic when they see a bee. They are small but smart creatures. If you move your hand quickly to hit the bees, this is an aggressive action and bees will defend themselves. They can sense the adrenalin in our body. But if we are calm, they are move away.”

While you're here

Andrew Wilks: Turkey’s promised reforms could recast US relations under Biden administration

David Lepeska: How two 16th-century pirates inspired Erdogan's foreign policy

Con Coughlin: Grandstanding in Turkey leads to terrorism in France

Afghanistan fixtures

v Australia, today
v Sri Lanka, Tuesday
v New Zealand, Saturday,
v South Africa, June 15
v England, June 18
v India, June 22
v Bangladesh, June 24
v Pakistan, June 29
v West Indies, July 4

Business Insights

Canada and Mexico are significant energy suppliers to the US, providing the majority of oil and natural gas imports
The introduction of tariffs could hinder the US's clean energy initiatives by raising input costs for materials like nickel
US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs

Five expert hiking tips

Always check the weather forecast before setting off

Make sure you have plenty of water

Set off early to avoid sudden weather changes in the afternoon

Wear appropriate clothing and footwear

Take your litter home with you

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