* GPIF posts $20.9 bln investment gain for quarter
* Results follow investment shift to stocks
* Bond holdings return negative (Adds details on foreign bond holdings)
By Junko Fujita
TOKYO, Nov 25 (Reuters) - Japan's Government Pension Investment Fund, the world's largest pension fund, posted a gain of 2.37 trillion yen ($20.9 billion) in the fiscal second quarter thanks to a rebound in global stock markets.
The result, GPIF's first profit in four quarters, follows its historic policy shift in 2014 of increasing its investments in riskier assets such as stocks for higher returns.
During the quarter, world stocks rebounded from lows hit after Britain voted in June to leave the European Union, which triggered a surge in the yen against the dollar.
"Global investors became more eager to take risks in their investments as oil prices turned stable, which sent the S&P500 index to a historic high during the quarter," GPIF President Norihiro Takahashi said in a statement.
GPIF, which managed 132.8 trillion yen worth of assets as of September, had a return of 1.84 percent in the quarter, generating paper gains of 2.37 trillion yen.
Yields on 10-year Japanese government bonds rose after the Bank of Japan overhauled its policy and set targets for government bond yields in September, he said.
Rising yields, while a positive sign for the economy, had forced GPIF to post a negative return of 1.34 percent in its bond holdings.
The gain in the stock indexes helped GPIF to report a positive return of 7.14 percent in its stock portfolio.
Stocks rose on expectations for the positive outcome from the government's economic stimulus measures, Takahashi said. In the three months through September, Japan's benchmark Nikkei 225 gained 5.6 percent.
The GPIF's late 2014 investment shift saw it reduce its reliance on low-yielding domestic bonds and increase weightings of stocks and other riskier assets.
Of all the pension reserve which also included 8.4 trillion yen pooled at Japan's health ministry, 21.59 percent was allocated to Japanese stocks, underweighting the target set in 2014.
Its allocation of domestic bonds fell to 36.15 percent of assets, the lowest level since 2014, but still overweighting the target.
GPIF said it had owned shares in 2,120 stocks through March 31, which included Toyota Motor Corp, Mitsubishi UFJ Financial Group, Nippon Telegraph & Telephone Corp , Honda Motor Co and KDDI Corp.
GPIF also had owned Japanese bonds issued by 488 entities, including the Japanese government, Japan Expressway Holding and Debt Repayment Agency and Japan Finance Organization for Municipalities.
The pension fund had owned stocks in 2,591 overseas companies, including Apple Inc, Microsoft Corp , Exxon Mobil Corp and Johnson & Johnson .
GPIF also had held government bonds from the United States, Italy, France, the UK and Germany.
It had held bonds issued by around 1,800 entities, an increase from 597 in March 2015, as GPIF diversified its foreign bond portfolio to take more risks, said Shinichiro Mori, a GPIF spokesman.
GPIF directly invests only in a portion of bonds, while it asks other financial institutions to manage most of the bonds and all the stocks.
$1 = 113.4700 yen Reporting by Junko Fujita; Editing by Kim Coghill