The past few years have amply demonstrated why the world’s most successful asset owners combine process discipline with hard work, talented personnel and a willingness to embrace new opportunities.
Some of this year’s winners demonstrated global standards of sophistication and knowhow, while others have been expanding their capabilities amid increasingly unpredictable market conditions.
It was not easy to pick the winners. In addition to gaining self-nominations, we sought out the advice of some of the most talented and experienced advisers and consultants in the markets. And we invited a small panel of judges to volunteer their expertise and knowledge to assess applicants, and suggest their own. That still led to some highly competitive categories, in which we had to choose between impressive organisations.
These awards are a testament to the dedication with which the region’s best institutions take the management of their assets. As the world increasingly traverses a period of political uncertainty and inferior fixed rate returns, the need for investors to be nimble and open to new ideas will continue to mount.
Our last two awards went to individuals. We introduced a Best Chief Investment Officer award this year, and announced the winner at our awards dinner in early December: Hiromichi Mizuno of the Government Pension Investment Fund of Japan. In addition, we recognised the longstanding work of Man Juttijudata at the Government Pension Fund of Thailand to extend its portfolio of assets and risk assessment.
Government Pension Investment Fund (Japan)
Since taking the reins of GPIF’s investment process in 2015, Hiromichi Mizuno has not been afraid to shake things up.
The former private equity investor has installed better governance procedures at the mammoth pension fund, to clarify how it makes decisions and picks fund managers to run its money (GPIF by law has to outsource all of its equities and international bond investments). This has included more information being made available in English.
Mizuno has also been aware of the limited value many active investors bring to the table, with many failing to offer GPIF superior returns to passive indexes, net of fees, over a decade. That led him to announce that external managers that beat their benchmarks would receive commensurate fees from April 2018, while those that failed to do would only get passive-equivalent fees.
The idea, Mizuno says, is to encourage fund managers to strive for better investment returns, while not overpaying for poor performance. However, the new fee structure has to date been an indictment of the performance of several active managers; GPIF saved ¥19.3 billion in fees because many failed to outperform. Hopefully they will do better in coming years.
In addition, Mizuno’s interest in artificial intelligence led GPIF to team up with Sony Laboratories in 2018 to create ways to measure the degree to which a selection of active managers stuck to the investment mandates they had been commissioned to perform. The initial results focused on a portion of the portfolio, and have been promising. A broader rollout is being prepared.
GPIF has also solidly committed to ESG under Mizuno. The CIO told AsianInvestor the pension fund is so large – it effectively invests in every major Japanese and global company – that its biggest vulnerabilities are not price movements but systemic and structural market failings.
To minimise this risk Mizuno committed GPIF to be an advocate for good governance, board diversity and pressurising companies to tackle climate change and carbon emissions, to best ensure market sustainability. Its example has helped to drive the entire ESG agenda in Asia, and indirectly led more asset owners to sign up to the United Nations Principles for Responsible Investing.
Mizuno’s willingness to shake things up at GPIF has made him slightly controversial in Japan’s traditionally conservative finance industry. However, his tenure as CIO, which was meant to expire in October, has been extended to the end of March 2020 – the same date as the retirement of GPIF president Norihiro Takahashi, and the longest it is can be extended.
It remains to be seen whether Mizuno will be asked to – or indeed want to – keep his job beyond that date, but he has already created a powerful legacy.
INDIVIDUAL CONTRIBUTION TO INSTITUTIONAL INVESTMENT
Man Juttijudata, assistant secretary, risk management group
Government Pension Fund (Thailand)
One of the best signs of success is to gain the admiration of your peers. That is something that Man Juttijudata (or Chutichudet), deputy principal of GPF, has attained.
The CIO of a notable asset owner in the country credits Man with acting as an innovator at the public pension organisation. The investing veteran had previously been the risk manager at Kasikorn Asset Management, which included using derivatives and structured funds, and he brought this experience to bear inside once he joined in May 2006, also in risk management.
Then, following the global financial crisis of 2008, Man played an integral role in helping GPF reshape its investment portfolio away from a reliance on conventional fixed income assets.
In the years since Man was promoted to run GPF’s investment strategy department, overseeing strategic and tactical asset allocations. His strong performance led to his promotion to become the assistant secretary-general responsible for strategic management and business development.
While in this role, Man and his colleagues oversaw a gradual introduction of overseas assets into the pension fund from 2013, and then a gradual shift of equities management into its in-house team. It also shifted more of the investment decision-making process from the board level down to investment committees, to facilitate streamlined and faster decisions, cutting investment approvals down from three months to six weeks.
In addition, he has helped to add to GPF’s competencies in alternative assets, a space the pension fund has focused increasingly on building up in recent years. It has also begun to embrace environmental, social and governance investing, and Man assisted in the process for GPF becoming a signatory of the United Nations Principles of Responsible Investment.
Most recently, Man changed roles once more, becoming GPF's assistant secretary for risk management – an area in which he evidently excels.
For a stint that has seen GPF change from being a conservative fixed income fund into a genuinely international asset investor with a keen eye on risk, Man deserves a lot of credit.