Giant Japan public fund picks 6 firms to manage emerging market equities
TOKYO, July 2 — Japan's Government Pension Investment Fund, the world's biggest public pension fund, said today it had selected six asset management companies to actively manage emerging market equities in its $1.35 trillion portfolio.
It will be the first time the public fund, known as GPIF, has invested in emerging markets.
The GPIF, which holds 108.1 trillion yen (RM4.05 trillion) in total assets and nearly equivalent to the size of the Spanish economy, selected Invesco, Nomura Asset Management, Nomura Funds Research and Technologies, Mizuho Asset Management, Sumitomo Mitsui Asset Management and Lazard Asset Management .
The GPIF is under pressure to raise investment returns to cope with pension payouts for Japan's rapidly aging population.
The public fund has became a net seller of its assets since 2010 as it pays out more in benefits each year than it receives in contributions to the national pension.
The GPIF said MSCI Emerging will be used as a benchmark.
The pension fund originally issued a tender to pick active and passive fund managers for emerging market equity investments in October 2010.
But the GPIF said there were no suitable asset management companies for passive investments.
The GPIF allocates its funds in four asset classes – foreign equities, domestic equities, foreign bonds and domestic bonds.
The GPIF's investments in emerging market equities will be allocated from the foreign equities portfolio, with an asset size of around 10.9 trillion yen or about 10 per cent of the total portfolio as of December 2011.
The pension fund makes allocations in line with its model portfolio, which gives a weighting of 11 per cent to domestic stocks, 67 per cent to domestic bonds, 9 per cent to foreign stocks, 8 per cent to foreign bonds and 5 per cent to short-term assets. — Reuters