The Government of Japan Pension Fund (GPIF) the big ‘kaiju’ of the stock scene A financial beast of €1.2 trillion in assets under management that remains under the radar of small investors, but he is one of the fixtures of the world elite looking to sell stocks or bonds. It is also one of the most active investors in Spain, especially in debt issues, although it also has a billion-dollar portfolio of shares that is referenced to the main values of the Ibex 35, the guiding index of the Spanish stock market.
Its global position in Spain among Spanish listed assets (fixed and variable income) exceeds 20,100 million euros (3 trillion yen), 4.3% more in Japanese currency and 4.6% less in exchange with the European one, according to data obtained by ‘La Información’ from the last annual report of the GPIF. The sharp depreciation of the yen against the euro continues to set the tone for Japan’s largest investor, which has seen the yen lose nearly 25% of its value since the 2020 pandemic. The exchange rate has gone from 120 to 150 units for each euro in these three years.
The Japanese fund has around 40 Spanish shares in its portfolio, mostly from the Ibex 35, for a value of 2,300 million euros, barely 10% of its total portfolio. Iberdrola, Banco Santander, BBVA, Inditex, Amadeus, Telefónica, Cellnex, Repsol, Caixabank and Ferrovial completing the top 10 where they have the most money with positions valued between 150 and 450 million euros.
The incorporation of Logista stands out after its entry into the Ibex 35, although it has also added Unicaja Banco and FCC, Carlos Slim’s construction company. Instead, Vidrala, Zardoya Otis and Siemens Gamesa left, the latter two after being delisted. The Japanese fund is recovering some ground but it is still far from the value of the portfolio on the Spanish stock market that it had in 2019, above 3,300 million.
Preference for fixed income
The preference of the Japanese pension fund directed by Miyazono Masataka is clearly inclined towards fixed income. At the end of its last financial year, the GPIF held a position of 17,800 million euros (2.6 trillion yen) in Spanish debt, made up of corporate issues of Spanish companies of the Ibex 35, but especially it was invested in ultra-conservative fixed income, which in 2022 suffered a drop in price -and an increase in profitability- due to the rate hike.
6% year-on-year compared to the almost 19,000 million euros that it had at the end of March 2022 investments are Public Treasury bonds. At the top are the 637 million euros that are held in an Obligation issued in 2013, and maturing in 2028, which pays an annual coupon of 5.15%. Second, with the same amount, a 2001 bond maturing in 2032 that yields 5.75% each year. They are the two jewels in the crown of a portfolio in which there is also debt with shorter terms and 0% coupons that the Spanish Government issued between 2020 and 2021 thanks to the ECB.
The mirror in which Minister Escrivá looks at himself
Japan’s pension fund is the largest investment vehicle in the world, managing Japan’s pensions with a long-term and diversified approach. It is the equivalent of the Social Security reserve fund in Spain, except that it was created in 2006 but instead of being emptied, it receives contributions, is nourished by its own income and is managed independently and professionally.
Its mission is “to contribute to the stability of the national pension system, ensuring a return with minimal risk for the benefit of pensioners”, as it explains on its website. Japan’s public pension system is pay-as-you-go and incorporates the “intergenerational dependency concept”, where workers’ contributions support retirees, just like in Spain. In both cases, the aim is to offset the impact of the drop in the birth rate, population aging and the increase in the number of pensioners on the cost of the system. In Spain, the bill has doubled in 15 years to 190,000 million in 2023.
The GPIF divides its capital provision into four main areas: Japanese stocks, domestic government debt, foreign stocks and bonds. The Spanish Social Security reserve fund, on the other hand, only invests in public debt and, for the most part, it is the one issued by the state itself, which violates the principle of diversification. Shortly before the 23-J elections, the Government of Pedro Sánchez accelerated the implementation of the regulations for the development of similar pension plans.
Another prominent example is the Norwegian sovereign wealth fund (NBIM), although it is owned by the state and not by contributing pensioners and employees. The value of its portfolio is also around one trillion euros and is used by the Government of Oslo to diversify the currency reserves generated by the exploitation of natural resources such as oil and natural gas. In his case, he only invests in stocks and bonds from other countries, although in recent years he has diversified into real estate, renewable infrastructure projects and also venture capital.
