Following the loss of Japanese pension stocks, the United States also follow the footsteps.
On Monday, Calpers, the largest public sector pension fund in the United States, reported a return on the 2015-2016 fiscal year, setting a new low since the financial crisis, largely because of stock losses.
Karls manages 1.7 million US dollars in California public sector staff pension, about $ 295 billion, while the fiscal year returns were only 0.6%, failing to reach 7.5% of the investment target.
This is the second consecutive year that the Fund’s investment income is not up to standard, after a fiscal year earnings of 2.4%.
In this regard, Hoover Institute senior researcher and Stanford Business School professor of finance, Joshua & middot; Lal has questioned the government for the high return on pension investment assumptions are too optimistic.
However, the National Public Employees Retirement System Committee head of Hank & middot; Kim said that the reason why the pension fund return rate set to 7.5%, is entirely based on historical experience.
A study by Cliffwater, an investment adviser, shows that the average annual rate of return on US public pensions is as high as 7.3 percent in the decade of 2005-2014.
About a week ago, Morgan Stanley data show that one of the world’s largest pension fund – Japan government pension investment fund (GPIF) held by the stock market value is also a serious shrink.
In the last fiscal year ended March 31, GPIF book losses of about 5 trillion yen, the first quarter of the new fiscal year, that is, the second quarter of this year and lost 4.4 trillion yen, the total loss close to
$ 100 billion.
As of June, Japan’s East China Index has fallen 19% during the year.
While the GPIF position is 25% investment in Japanese stocks, 35% of the investment in Japanese government bonds.
As the stock in the total investment in the weight of the decline, GPIF or will be forced to further increase the stock purchase, in order to achieve the goal of equity investment.
Pensions to invest in the stock market goes back to 2014, the Japanese government will be worth 1.4 trillion yen in the huge government pension fund from the bonds out, switch to stock.
As optimistic expectations of Abe’s policy will be successful, since the end of 2012 the policy has boosted Japan’s benchmark stock index doubled.
But not two years, Abe economics on the fragmented, the Japanese economy from the recession to the negligible growth, the stock market fell more than the recent high of nearly 1 / 4.
In fact, whether the United States or Japan, pension investment
Losses are related to low interest rates.
At present, many countries around the world interest rates are deviated from the normal track, many countries to implement ultra-low interest rates, some countries even into the negative interest rate era.
Interest rates deviate from the normal track, leading to a sharp rise in stock and risk asset prices, which means that the return on these overvalued assets will fall in the future.
As a result, the fixed income of the pension is even more difficult.
Japanese stock market slump, largely because the Bank of Japan to implement a negative interest rate policy, which makes the yen a substantial appreciation.
Right now, the Fed hike slowly, Morgan Stanley predicted that by 2018 the Fed will not raise interest rates.
If so, the United States will remain low interest rates for a long time.