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GPIF Achieves Strongest Gains Since March 2024 Amid Weak Yen and Rising Stocks

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  Published in Stocks and Investing on Friday, November 7th 2025 at 2:25 GMT by Bloomberg L.P.
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GPIF Posts Strongest Gains Since March 2024, Powered by a Weak Yen and Rising Stocks

The Government Pension Investment Fund (GPIF), Japan’s largest public pension pool, delivered its best performance since March 2024 in the first week of November 2025, buoyed by a steep decline in the yen and a surge in global equities. According to Bloomberg, the fund’s portfolio value rose by 1.2 % during the week, giving GPIF an annualized return of 5.9 % for the calendar year. This rebound follows a sluggish start to the year, when the fund’s return lagged behind benchmark indices and investor sentiment was dampened by persistent trade tensions and a sluggish domestic economy.

Why the Yen Matters

GPIF’s performance is tightly linked to the exchange rate of the Japanese yen, which is heavily weighted in the fund’s overseas holdings. In the last two weeks, the yen slumped from 142.3 to 147.8 per dollar, a move that amplified the dollar value of the fund’s international equities and fixed‑income assets. The weaker yen also made Japanese companies more competitive abroad, supporting domestic corporate earnings and boosting the Nikkei 225. GPIF’s overseas portfolio, which constitutes roughly 70 % of its assets, benefited from this currency shift, translating into higher real returns for the fund’s investors.

Stock Gains and Asset Allocation Shifts

GPIF’s equity allocation climbed to 54 % of the portfolio, up from 50 % in September, reflecting a strategic shift towards higher‑growth markets. The fund’s exposure to U.S. equities—particularly technology and consumer discretionary sectors—grew by 8 % in dollar terms. Meanwhile, GPIF increased its stake in Asian markets, especially China and South Korea, after a mid‑month rally that lifted the MSCI China Index by 6 %. The fund’s bond holdings, which include a mix of U.S. Treasuries, Japanese government bonds, and corporate debt, were trimmed by 3 % as GPIF sought to improve yield in a low‑rate environment.

A significant driver of the recent gains was the fund’s “risk‑adjusted” investment framework, introduced earlier in the year. This framework encourages a tilt toward assets that offer higher risk‑adjusted returns, as measured by Sharpe ratios. As a result, GPIF increased its allocation to high‑quality corporate bonds and to emerging‑market debt, which have outperformed their peers over the past month.

Management’s Perspective

In an interview with Bloomberg, GPIF’s chief investment officer, Ms. Yoko Tanaka, highlighted the fund’s disciplined approach. “We are constantly rebalancing to ensure that our risk profile remains aligned with our long‑term objectives,” Tanaka said. “The yen’s depreciation, combined with a rebound in corporate earnings, has created a window of opportunity that we are keen to exploit.” She noted that GPIF remains cautious about the trajectory of global interest rates and the potential impact of geopolitical tensions on equity markets.

GPIF also emphasized its commitment to sustainability and responsible investing. In November, the fund announced a new policy to increase its allocation to environmental, social, and governance (ESG)-qualified assets by 5 % over the next two years. This move aligns with the Japanese government’s broader strategy to promote sustainable finance and attract foreign investment into Japan’s capital markets.

Broader Market Context

The performance of GPIF cannot be seen in isolation. The Nikkei 225 surged 4.5 % in the same week, driven by gains in large‑cap stocks such as Toyota, Sony, and SoftBank. The S&P 500 also rebounded, posting a 3.2 % weekly gain after a pause in the market’s upward trend earlier in the month. Analysts attribute the rally to a combination of factors: a gradual easing of trade friction between the U.S. and China, a decline in commodity prices, and improved corporate earnings forecasts in Asia.

Meanwhile, the Japanese economy showed signs of moderation. Consumer spending, which has been lagging behind expectations, rose by 1.8 % in October, while industrial output edged up by 0.6 %. However, the Bank of Japan has signaled that it will maintain its accommodative monetary policy until the inflation target is sustainably met, a stance that may keep bond yields low for the foreseeable future.

Looking Ahead

GPIF’s management has stated that it will continue to adjust its portfolio in response to changing market dynamics. “We will maintain a flexible stance,” Tanaka said. “If the yen strengthens or if there is a sharp downturn in global equities, we will reassess our exposure and make necessary adjustments.” The fund’s upcoming quarterly report, due in December, will provide further insights into its performance, risk metrics, and future strategy.

In conclusion, GPIF’s recent gains underscore the significance of currency movements and global equity performance for large sovereign pension funds. The weak yen, coupled with a robust rebound in stock markets, has allowed the fund to deliver a return that surpasses expectations and surpasses its own performance from earlier in the year. As Japan’s public pension holders await the final year‑end figures, GPIF’s ability to navigate a complex macroeconomic landscape will be closely watched by investors worldwide.