For the first time in its history, Japan’s  ¥113.6 trillion ($1.4 trillion) Government Pension Investment Fund is managing the majority of its assets via internal teams.

This reflects both a decision to in-source more management of its passively managed domestic bond portfolio, as well as to shorten the duration of its holdings, because the Japanese pension fund manages more short-term positions by itself.

The GPIF is Asia’s third-largest institutional investor, following the People’s Bank of China and Japan Post, according to AsianInvestor magazine, and the largest pension fund in the world.

According to GPIF data compiled and analysed by the Japan Pensions Industry Database, in-house managed assets have soared 72.8% year-on-year to ¥21.9 trillion by the end of March 2012. Full analysis can be viewed at the database’s website, ijapicap.com.

(These figures exclude assets managed for a separate bucket called the Fiscal Investment and Loan Program, which is gradually being phased out as this debt matures. Including the FILP, the GPIF manages ¥35.4 trillion in-house).

Of the 26 external fund managers handling GPIF mandates, 17 recorded modest increases in the market value of those portfolios, year-on-year to end-March. The stand-outs are Daiwa SB Investments, whose portfolio value increased 36.4% to ¥116.9 billion; and Invesco, up 10.7% to ¥266.6 billion.

Those fund houses that recorded the steepest declines in market value of GPIF-mandated portfolios are: Fidelity International, down -60.7% to ¥102.5 billion; Resona Bank, -17.9% to ¥8.1 trillion; Sumitomo Mitsui Trust Bank, -14.0% to ¥21.9 trillion; and Mitsubishi UFJ Trust & Banking, -13.2% to ¥10.2 trillion.

SMTB, thanks to its acquisition of Chuo Mitsui Trust & Banking, is now the second largest manager of GPIF money, after the GPIF’s own team. Third is BlackRock, with ¥11.0 trillion (down -3.6% YoY).

The Japan Pension Industry Database has also broken down the biggest managers of GPIF money by asset class, noting the change in market value over the past fiscal year.

The biggest change is in domestic passive fixed income, where the in-house team’s AUM grew 77.9% to ¥17.4 trillion, even as total exposure to passive Japanese bonds declined slightly, by -1.8% to ¥47.7 trillion. The losers in this business were SMTB (-21% to ¥12.9 trillion) and BlackRock (-8.8% to ¥5.7 trillion).

The other asset class where portfolio market value has shrunk is international active equities, down -18.3% to ¥1.5 trillion. However, the biggest managers in this field enjoyed modest gains in the value of their GPIF mandates, including Amundi (up 3.0% to ¥258 billion) and BlackRock (up 3.6% to ¥214.9 billion).

The biggest gains went to SMTB’s domestic passive equities portfolios, which gained 10.7% to ¥3.2 trillion; this asset class also saw 7.0% gains by Mitsubishi UFJ T&B to ¥1.9 trillion, and by Mizuho Trust & Banking, up 3.8% to ¥1.7 trillion.

The GPIF’s leading international active and passive bond managers also did well. In the active space, BlackRock, Pimco and Goldman Sachs Asset Management saw the value of their mandated portfolios rise by 4.4% to 4.8%. In the passive area, SMTB, State Street Global Advisors and Northern Trust all posted gains.