GPIF posts second-highest gain of 41.4 trillion yen in fiscal 2025

2026-07-03

Domestic and overseas stocks lead gains

The Government Pension Investment Fund (GPIF) said on the 3rd that its investment return for fiscal 2025 was a surplus of 41,399.5 billion yen. Gains in Japanese and overseas stocks, along with a weaker yen, boosted returns. Market conditions remain firm in fiscal 2026 on expectations for growth in artificial intelligence (AI), and the benefits of higher stocks are also flowing through to pension finances.

On a single-year basis, the result was the second-largest on record, after 45,415.3 billion yen in fiscal 2023. It was the first time since the fund began market investing in fiscal 2001 that it posted gains for six straight years. Assets under management reached 293 trillion yen, up by about 100 trillion yen from the end of fiscal 2021.

Performance by asset class

By asset class, Japanese stocks gained 20,455.6 billion yen, foreign stocks gained 16,624.0 billion yen and foreign bonds gained 8,040.6 billion yen. Markets were shaken at times by the Trump administration's announcement of reciprocal tariffs, but expectations for a solid global economy and for stronger corporate earnings, particularly in AI-related sectors, lifted share prices. A weaker yen also increased the yen value of foreign-currency-denominated assets.

Japanese bonds, meanwhile, posted a loss of 3,720.7 billion yen. Rising domestic interest rates pushed down bond prices, reducing the market value of bonds held by the fund.

The return rate was 16.47%. The cumulative annualized return since fiscal 2001 was 4.33%, above the long-term target of a level '1.9% higher than wage growth'.

Investment performance is also seen as solid after the start of fiscal 2026. Based on stock and bond indexes referenced by GPIF, Nikkei estimated that Japanese stocks generated about 10 trillion yen in gains in April-June, while foreign stocks generated 13 trillion yen.

AI and semiconductor-related stocks are being bought globally, with major stock indexes repeatedly hitting record highs. GPIF manages its portfolio in line with a basic allocation that puts half of assets into Japanese and overseas equities, and the rise in AI-related stocks is being broadly reflected through pension finances.

Since fiscal 2014, GPIF has increased its allocation to risk assets, including raising its equity weighting to 50%. As a result of taking risk with an emphasis on long-term returns, cumulative gains since fiscal 2001 have reached 88 trillion yen in foreign stocks and 71 trillion yen in domestic stocks.

Even so, a fall in stock prices or a sharp rise in interest rates would be an unavoidable headwind. Pension benefits are financed roughly 90% by insurance premium income and government contributions, while funding from reserves accounts for only about 10%. Changes in reserve assets do not directly affect benefits, and investment results need to be assessed from a long-term perspective.

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