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 follows GPIF’s 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.
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.
Stocks rose on expectation for the positive outcome from the government’s economic stimulus measures, he added.
In the three months through September, Japan’s benchmark Nikkei 225 gained 5.6 percent.
GPIF, which managed 132.8 trillion yen worth assets as of September, had a return of 1.84 percent in the quarter, generating paper gains of 2.37 trillion yen.
Of GPIF’s four asset classes, the Japanese stock portfolio had a return of 7.14 percent, while the Japanese bond portfolio had a negative return of 1.34 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.
It allocated 36.15 percent of assets to the domestic bonds, 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.
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