The world's biggest pension fund, Japan's Government Pension Investment Fund, has begun to shrink unambiguously during its 2011/12 financial year, according to one expert - highlighting challenges for the managers investing its giant portfolio.

The GPIF published its results for the three months to the end of June on Monday, reporting that its portfolio fell from ¥116.3 trillion to ¥113.7 trillion during the period. That was despite a positive investment return of 0.21% in the quarter, mostly thanks to its holdings in domestic bonds.