Japan’s Government Investment Pension Fund (GPIF) posted a 5.2% return in the three months to December, its largest investment gain in almost two years, after it added equity holdings and cut its allocation to Japanese bonds.

Assets under management at the world’s largest pension fund rose to a record JPY137trn (€1trn).

Japanese debt made up 43% of GPIF’s holdings, down from 48% three months earlier, while the allocation to local equities rose to about 20% from 18%.

Foreign bond holdings rose to 13.14% in the fourth quarter from 11.84%, and foreign stocks climbed to 19.64% from 16.98%.

Domestic shares returned 6.2% in the quarter, up from 5.8% in the three months through September.

The fund made 1.9% on its investments in Japanese debt, from 05% in the previous period.

Foreign bonds returned 9.4%, and overseas stocks gained 10%.

The fund changed its investment strategy drastically in October in line with prime minister Shinzo Abe’s push to boost returns as pension obligations swell in the world’s oldest population.

Under the reform, GPIF had set an allocation target of 25% each for Japanese and overseas equities, up from 12%.

The target for local debt was set at 35%, down from 60%, and 15% was set for international bonds, up from 11%.

GPIF has yet to make any investments in alternative assets, but the fund is allowed to invest as much as 5% of its holdings in the asset class.

The latest figures are the first to show GPIF’s asset mix since it unveiled the plans in October.