The World’s Largest Pension Fund Posted a Q1 Loss of $165B

The World’s Largest Pension Fund Posted a Q1 Loss of $165B

Japan’s Government Pension Investment Fund (GPIF) has posted a record quarterly loss of 17.71 trillion yen ($164.74 billion) in the first quarter of 2020 as COVID-19 hit stock markets. The damage is equivalent to the Bitcoin’s entire market capitalization. The GPIF decreased by almost 11% to 150.63 trillion yen ($1.4 trillion) in assets.

The world’s largest pension fund has recorded a negative 5.2% return in the fiscal year ending March 31, 2020, and lost 8.3 trillion yen. This was the GPIF’s steepest quarterly decline in assets based on comparable data back to April 2008. The loss was driven largely by its investments in foreign and domestic stocks.

Bitcoin Could Not Save GPIF

Bitcoin, too saw a decline of approximately 11% in its price in the first quarter of 2020. This led to extreme disappointment among the Bitcoin supporters, who hoped that investing in Bitcoin is safe.

However, if GPIF had invested only 0.1% ($1.5 billion) of its assets under management in Bitcoin in the first quarter of 2020, it would have succeeded in creating extreme buy pressure on the market.

Could Bitcoin Save It

Though it is highly unlikely if the GPIF investors would have bought $1.5 billion worth of Bitcoin in a short time frame of three months, it could have been beneficial for them. This would have ultimately led to positive returns for the crypto segment of GPIF’s portfolio.

What GPIF Should Do

The quarterly loss poses a potential challenge to its president Masataka Miyazono, who was appointed in April 2020. According to Miyazono, both foreign and domestic equity markets witnessed a decline due to investors taking a risk-off stance amid the global coronavirus pandemic.

The GPIF has a great impact on global financial markets. The pension fund must navigate a volatile market. As a part of that, the GPIF in April 2020 has raised its asset allocation to foreign bonds to 25 percent, while keeping the asset allocations for foreign and domestic stocks unchanged at 25 percent.

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