Defined benefit pension funds in Japan have sharply increased the amount they have handed to fund houses to invest on their behalf, new data reveals.

As of the end of the 2014/15 financial year on March 31, figures from the Japan Pensions Industry Database* showed fund firms were managing ¥115.9 trillion ($932 billion) for DB schemes via segregated accounts, a 10.9% year-on-year increase.

The data highlighted a decrease in the number of segregated mandates that these fund houses were managing at 4,769 – a drop of 241 from the previous year. That means DB schemes have been increasing the size of their allocations.

It comes after Japan’s $1.2 trillion Government Pension Investment Fund (GPIF) changed its allocation targets in a drive to double domestic and international equities exposure to 25% each, as reported.

GPIF has actively set out to reduce domestic bond exposure to 35%, from 60% previously. Last month it reported a 12% annual return for its portfolio, with domestic and global equity exposure responsible for much of the excess, as reported. That was its best result since being set up in 2001.

The three big Japanese mutual aid associations, which have combined assets of ¥27 trillion, have been told to follow GPIF’s lead, setting an example for the rest of Japan’s corporate pensions market to follow.

The big takeaways from the industry data are that while Sumitomo Mitsui Trust Bank remains the top manager for Japanese DB segregated pension assets by value, its AUM decreased marginally, as did that of State Street Global Advisors (Japan).

Top 20 managers of Japanese defined-benefit segregated pension assets
Rank Company Market value, billion yen, at March 31
2014 2015   2014 2015
1 1 Sumitomo Mitsui Trust Bank 20,085.9 19,368.6
3 2 BlackRock Japan 11,381.1 15,463
2 3 Mizuho Trust & Banking 14,263.1 14,687.4
4 4 State Street Global Advisors (Japan) 11,052.7 9,740.8
5 5 Diam 6,429.6 8,532.2
6 6 Nomura Asset Management 4,544.5 4,843.2
7 7 Tokio Marine AM 3,730.4 3,906.1
9 8 Goldman Sachs AM 2,068.3 2,644.7
8 9 Pimco Japan 2,173.5 2,384.5
10 10 Nissay AM 1,896.8 2,270.7
11 11 Northern Trust Global Investments Japan 1,733 2,202.8
12 12 Mizuho AM 1,654.3 2,186.5
13 13 JP Morgan AM (Japan) 1,600 1,773.3
15 14 Daiwa SB Investments 1,468.4 1,661.8
16 15 MFS Investment Management 1,403.8 1,655.5
14 16 MU Investments 1,597.9 1,648.6
18 17 Alliance Bernstein Japan 1,220.8 1,467.5
17 18 Sumitomo Mitsui AM 1,248.2 1,392.4
19 19 Wellington International Management 1,030.7 1,311.2
20 20 Morgan Stanley Investment
Managment (Japan)
979.5 1,280.7

 

However, BlackRock Japan saw its DB segregated pensions AUM surge 36% year-on-year to ¥15.5 trillion. That was driven by a 46% rise in its government-directed pension assets to ¥13.8 trillion. BlackRock (Japan)’s figures for corporate DB assets marginally declined.

 

Top 5 managers of Japanese government-directed defined-benefit segregated pension assets
Rank Company Market value, billion yen, at March 31
2014 2015   2014 2015
1 1 Sumitomo Mitsui Trust Bank 19,121.1 17,412
2 2 Mizuho Trust & Banking 14,149.9 14,526.6
4 3 BlackRock Japan 9,461.6 13,823.5
3 4 State Street Global Advisors (Japan) 10,924 9,607.1
5 5 Diam 5,202.4 7,123.9
Analysis & rankings: Jo McBride / Japan Pensions Industry Database
Data: Japan Investment Advisers Association

 

State Street Global Advisors (Japan) saw its DB segregated pension assets decline by almost 12% to ¥9.7 trillion as of March 31. This could reflect the fact that GPIF has increased its active allocations strongly over the past year.

Spokespeople for both BlackRock and State Street Global Advisors failed to respond to AsianInvestor's requests for comment by press time.

* For full details of these figures, please visit the Japan Pensions Industry Database: www.ijapicap.com