JAPAN - The world's largest pension portfolio, the Japanese Government Pension Investment Fund (GPIF), has begun the process of selecting new candidates to run mandates for the active management of domestic and foreign equities.
According to the most recent data, the GPIF currently has 30 investment companies actively managing both sets of stocks.
However, Nobu Shimizu, director general of the investment management department of the GPIF, admitted the Y110trn fund’s performance in active management had been poor to date, leading to a managerial revamp. Shimizu said the process should be concluded within several months.
In the last 12 months the GPIF has also dropped managers who ran actively managed foreign bond mandates. However, Shimizu declined to name those who had been fired.
In addition to the active mandates, Shimizu said the portfolio would invest in the small cap sector as previously reported in Global Pensions, with a managerial appointment for domestic stocks expected to be made this year.
Commenting on the fund’s investment philosophy, Shimizu said: “We are a beta investor and we are not seeking so much alpha. We considered the size of the assets we are managing and concluded that obtaining large alpha would be difficult for us. Of course we are seeking alpha but it is not easy. Largely speaking, we are not seeking absolute returns.”
In terms of the GPIF’s asset allocation, up until the end of December 2006, domestic bonds stood at 50.5%.
Based on data for the same period, domestic equities stood at 22.72%; foreign bonds represented 10.65%; foreign equities stood at 15.21%; and cash had a 0.91% allocation.
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