World’s Largest Pension Fund Lost the Equivalent of Bitcoin’s Entire Market Cap in Just Three Months

The world’s largest pension fund has lost nearly $164.7 billion within the first three months of 2020 and has suffered its worst full-year investment loss. The loss observed by GPIF is close to the entire market capitalization for Bitcoin. The Government Pension Investment Fund or GPIF of Japan has witnessed a decline of 11% in the first quarter, falling to $150.63 trillion. It is said to the steepest quarterly fall that it has seen since 2008 when the fund saw a 9.3 trillion yen loss and a -10.3% return during the financial year that ended in March 2009. 

The President of GPIF, Masataka Miyazono, announced that the domestic and foreign equities have resulted in the negative return in the first quarter of 2020. Overseas bonds were the only asset to give a positive return during this period giving a return of 3.55%. Even though the equity market performed extremely well in 2019 during the U.S. China negotiations, the global COVID-19 pandemic has led the investors to be more cautious.

GPIF is not the only stock to experience poor performance after the Coronavirus pandemic spread across the world. Other major stock indexes, such as Dow Jones, are also seeing the poor performance in the first quarter of 2020. But, what is surprising is that Bitcoin also saw a similar dip in performance where it fell by almost 11% in the first three months of 2020. In this case, it would not be safe to say that Bitcoin is a safe haven or the best investment opportunity, at least now. If GPIF had invested about 0.1% of its asset or $1.5 billion in BTC during the first quarter of 2020, it would have put a lot of buy pressure in the world market. The result would be a Bitcoin Bull Run and high returns for the pension fund’s portfolio belonging to the crypto segment. 

Even though the scenario may seem unlikely as pension funds are among the most conservative investors, most investment trusts in Japan has only a small portion of their funds in crypto assets, which includes BTC. They are apprehensive that cryptocurrencies are more speculative and have high price fluctuation and liquidity risks that they do not want to take. In addition, purchasing 208,000 BTC amounting to $1.5 billion would have been a Hercules task for the investors during that short period of time.  

The GPIF claims that the pension reserve fund is managed with a long-term perspective. They believe that the pandemic will only cause short term losses, and the investment is rather immune to volatility in the long term and will provide a positive return in the long term without any problem. With the improvement of the global economy and the domestic equity market, experts believe that the investment performance should return to normal, but it is yet to be seen. The GPIF annual return since it was created back in 2001 is 2.58%.