GPIF names new head of investment strategy
Japan’s Government Pension Investment Fund has reportedly set up a new department for investment strategy and installed Atsushi Ikari to run it as director-general.
Ikari has been seconded from Japan’s health, labour and welfare ministry, which administers the $1.3 trillion government pension fund.
He replaces Tokihiko Shimizu, who worked at GPIF for seven-and-a-half years, most recently as director-general of its research department. Shimizu returns to the ministry as head of research responsible for analysing public pension contribution rates.
It has been reported by Pensions & Investments that GPIF has converted the research unit into its investment strategy department, with roles to be added overseeing risk management and rebalancing strategy. A GPIF spokesman declined to confirm this.
But the change has occurred at the same time as Hiromichi Mizuno began as GPIF’s first chief investment officer at the start of this year, having resigned as investment committee member last year, as reported.
Formerly a partner at London-based private equity firm Coller Capital, AsianInvestor has reported expectations that Mizuno will reinforce GPIF’s investment teams, given it has just 30 portfolio managers boasting the Japan equivalent of a CFA qualification.
Both Ikari and Shimizu have worked as government colleagues for 20 years, with Ikari joining the ministry just a year after Shimizu. He is now following in Shimizu’s footsteps at GPIF.
Shimizu was initially seconded to GPIF in August 2007 shortly before the global financial crisis, when he was named deputy director-general of its planning department.
By March 2008 GPIF set up a research department and installed Shimizu as director-general. That unit was responsible for portfolio construction and investment strategy.
It is understood that public servants in Japan are meant to return to government within five years of a secondment, although Shimizu’s stay at GPIF was extended by two years as the organisation underwent unprecedented change.
Shimizu confirmed to AsianInvestor he left GPIF on January 4 to take up a new role as head of research at the health, labour and welfare ministry on January 5.
Asked to reflect on his time at GPIF, Shimizu listed a number of landmark changes that GPIF has made in response to negative cash flow due to Japan’s ageing society.
“The biggest issue was the portfolio change that happened at the end of October last year,” he said. “The strategic allocation is quite different from the previous one.”
GPIF set out a new strategic asset allocation plan to almost halve its domestic debt exposures and ramp up its holdings of international stocks and bonds, as well as branch out into alternative investments, as reported.
It announced a revised medium-term plan effective from the end of October with a target allocation to move from 60% domestic bonds to 35%, while increasing domestic stocks from 12% to 25%.
At the same time it will seek to increase its holdings of international stocks from 12% to 25% and international bonds from 11% to 15%. It also plans to introduce alternatives to a maximum 5% of the overall portfolio.
Shimizu pointed to changes in its investment structure as key, with an overhaul of its equity portfolio with the addition of three benchmark indices for passive investment, including the JPX-Nikkei 400, launched by the Japan Exchange in January last year and comprising firms selected for higher return-on-equity and profits.
He also highlighted GPIF’s moves into smart-beta investing, the introduction of a performance-based fee structure for active managers, to replace its fixed-fee approach; and the move into alternatives, with GPIF having initiated a partnership with the Canadian Pension Plan Investment Board for infrastructure investing.
“This kind of structural change is very important,” Shimizu said, modestly declining to list his own achievements. “I just did my best,” he stated.