Japan’s Pension Fund Takes a $61 Billion Hit

Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund, just announced a massive $61.1 billion loss for the first three months of the year. This is their first loss across all investments since mid-2022.

A Weak Dollar and Wobbly Markets

The main culprit? A weaker US dollar. The dollar dropped 4.6% against the Japanese yen, significantly impacting the value of GPIF’s international investments. Global markets also struggled, with major indexes like the S&P 500 and the MSCI All-Country World Index seeing declines. Even Japan’s Topix index took a hit.

The Bigger Picture

These losses shrank GPIF’s total assets to $1.73 trillion, a 3.4% drop for the quarter. Rising US trade tariffs and concerns about global economic conflict added to the pressure on the markets. Meanwhile, Japanese bond yields went up, contrasting with falling US Treasury yields due to the Federal Reserve’s interest rate policies.

Looking Ahead

Despite the significant quarterly loss, GPIF still managed a small 0.7% annual return for the fiscal year ending March 31, 2025. However, with about half its assets in foreign markets, the fund is likely to continue facing risks from currency fluctuations and trade tensions, especially with ongoing US-Japan trade negotiations.