TOKYO :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 per cent negative return on its overall assets during the three months compares with a 2.81 per cent 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 per cent of the total assets.
During the quarter, the Dow Jones Industrial Average dropped 5 per cent, while Japan's Nikkei stock average fell 3 per cent. The GPIF's foreign stock portfolio posted a loss of 0.55 per cent, while its Japanese stock portfolio had a loss of 1.22 per cent.
Its foreign and Japanese bond portfolios posted losses of 1.22 per cent and 1.54 per cent 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 per cent 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 per cent of its portfolio and foreign bonds accounted for 24.07 per cent. Foreign equities accounted for 25.11 per cent and domestic equities 24.49 per cent.
($1 = 134.9400 yen)