GPIF’s Quarterly Loss Reaches 5.25 Trillion Yen as Foreign Bonds Fall
Key Facts
Japan’s Government Pension Investment Fund (GPIF) reported an investment loss of 5.25 trillion yen, equivalent to 33.3 billion dollars, in the three months ended September 30, 2026, according to Investing.com. The result followed a 24.09 trillion yen gain in the June quarter, marking a sharp reversal between consecutive periods. The fund’s total return was negative 1.65% in the second quarter of fiscal 2026, after posting a positive return of 8.20% in the first quarter, according to a GPIF report. Foreign bonds were the largest source of losses among asset classes. Still, the fund’s cumulative performance since the start of the fiscal year remained positive through the end of September.
The value of GPIF’s assets fell to 314.39 trillion yen at the end of September from 317.76 trillion yen three months earlier, according to Investing.com. That reflected a decline in total assets during a quarter marked by a large investment loss, though the fund remained one of Japan’s largest institutional investors. For the fiscal year through the end of the second quarter, GPIF posted a cumulative gain of 18.84 trillion yen, with a return of 6.42%. That cumulative performance contrasts with the negative quarterly return, as it combines the current quarter’s result with gains from the preceding period. The fund’s data showed a return of 16.47% in one of the periods shown in the sequence, followed by 8.20% in the first quarter, before turning negative at 1.65% in the second quarter.
Foreign bonds were hit hardest, falling 6.52% and incurring a loss of 5.23 trillion yen in the second quarter of the fiscal year, according to Investing.com. Domestic bonds also fell 1.80%, while foreign equities declined 1.86%. Domestic equities, by contrast, rose 3.71%, posting a gain of 2.88 trillion yen, and were the only asset class to record gains during the quarter. That performance helped offset some of the losses in bonds and foreign equities, but was not enough to make up for the overall losses. The comparison across asset classes shows a clear divergence in portfolio performance, with a large share of the loss concentrated in foreign bond holdings.
GPIF linked falling bond prices to rising interest rates in Japan and abroad, according to the fund’s official report. In overseas markets, the yield on 10-year German bonds rose from 2.86% at the end of June to 3.59% at the end of September 2026. The dollar also fell against the yen, from 162.53 yen at the end of June to 157.14 yen at the end of September. A lower dollar price in yen means the yen strengthened against the U.S. currency during the period, while German bond yields rose. The report said asset prices in the portfolio are affected by market movements when they are valued at the end of the period.
Japanese market data put the fund’s result in the context of rising domestic bond yields. Reuters reported that the yield on 10-year Japanese government bonds reached 3% in September for the first time since 1996, after rising more than threefold over the previous two years. Reuters also reported that Japanese investors were net sellers of 3 trillion yen in overseas debt through August 22, 2026, the largest annual outflow since the bond market selloff in 2022. An analyst at Mizuho said higher Japanese bond yields improve the appeal of domestic bonds after currency hedging and could encourage investors to shift investments from overseas into Japanese fixed-income instruments. These developments provide a broader backdrop to investor movements, while GPIF’s loss reflects its portfolio performance in the quarter ended in September.
At the end of September, domestic equities accounted for 26.49% of the fund’s assets, compared with a basic target allocation of 25%, according to GPIF. This offers an additional view of the portfolio’s composition alongside the positive performance of domestic equities during the quarter. The fund said the evaluation of pension investments should take their long-term nature into account. It added in its report that quarterly profits and losses fluctuate with market movements because assets are valued at market prices at the end of each period. The quarterly loss therefore formed part of the periodic valuation fluctuations of a portfolio designed to invest pension funds over a long horizon.