GPIF’s new leader faces investing shake-up, CIO search

The incoming president of the world’s largest pension fund will need to oversee a freer hand in foreign asset allocation and appoint a new CIO, with Hiromichi Mizuno leaving.
GPIF’s new leader faces investing shake-up, CIO search

The incoming new president of Japan’s Government Pension Investment Fund, the world’s largest pension fund, has several important issues to address.

The most pressing: implementing a new five-year investment plan and replacing its well-respected chief investment officer.

On March 24, Japan’s Ministry of Health, Labour and Welfare announced that Masataka Miyazono will be GPIF’s new president. He starts tomorrow (April 1), the same day that GPIF enters a new five-year plan that includes a new mid-term strategy.

In addition, he will need to choose the successor, with Hiromichi Mizuno, chief investment officer (CIO) at GPIF, apparently leaving as his period ends today (March 31).

Norihiro Takahashi

Miyazono is seen as a steady choice to replace current president Norihiro Takahashi. He is the head of the Pension Fund Association (PFA) and previously served as deputy president at agricultural lender Norinchukin Bank; an institution where Takahashi also worked.

“Miyazono-san’s appointment was not a surprise, but it was not obvious either because he is currently the president of the PFA,” a Tokyo-based investment adviser told AsianInvestor on condition of anonymity.

A senior Japanese investment executive who works with a global fund house and is familiar with GPIF noted that Miyazono and Takahashi’s shared Norinchukin experience means that “the organisational structure of GPIF should not change much”.

He believes, however, that the two men had different focuses. “Miyazono-san seems more focused on organisational structure and governance, whereas Takahashi-san is more focused on investments and strategies.”   


A key task to face Miyazono and the next GPIF CIO will be a revamp of GPIF’s investment portfolio.

The ministry’s GPIF fund management committee met to approve the next five-year plan yesterday (March 30). This will reportedly raise GPIF’s foreign bonds target from 15% to 25% of total AUM for the next five years – and might be allowed to increase it to up to 31% if it wishes. Meanwhile, domestic targets could drop 10 percentage points within the portfolio allocation mix.

That shift likely reflects the fact that low-yielding Japanese government bonds are becoming an issue for Japanese asset owners, including life insurers.

A GPIF spokeswoman declined to comment on specific planned changes to GPIF’s portfolio allocation mix.

GPIF’s portfolio currently has a 35% allocation target for domestic fixed income, 25% for both domestic and overseas equity and 15% for overseas fixed income. And it can invest up to 5% in alternatives, although this makes up less than 1% of its AUM.

The Japanese investment executive believes that the increase of GPIF’s foreign bond allocation could be accompanied by the pension fund increasing its internal investing capabilities, based on Miyazono’s experience at PFA.

“So far GPIF has mainly focused on investing in overseas green bonds and sustainable bonds issued by major institutions like the World Bank,” he noted. “But going forward we may see GPIF increase its in-house capabilities, similar to PFA, and also increase hedge fund and PE investments as well, as these were areas which boosted PFA’s relative returns.”

Anna Sharp, chief executive officer of the Asia Pacific Investors Cooperation (Apic), an institutional investor network, added that it would be sensible for GPIF to target better asset diversification by investing more in private markets and infrastructure – especially social infrastructure, in response to the coronavirus outbreak.

“The current situation with Covid-19 has exposed vulnerabilities in social infrastructure of countries all over the world,” Sharp told AsianInvestor. “OECD countries and emerging markets’ shortcomings in medical and public health infrastructure are exposed.” 

She also argued that Miyazono should encourage more investment in emerging markets and Asia, most specifically the Asean region, as they are young and fast-growing economies.


It remains uncertain who will directly oversee GPIF’s portfolio changes.

Hiromichi Mizuno

Mizuno, a former private equity and banking executive, has been CIO of GPIF since January 2015. While his term is expiring, the pension fund hasn’t yet said who will fill the role going forwards.

“The president will officially appoint the CIO. Nothing has yet been decided because the next president has not taken office yet,” the GPIF spokeswoman told AsianInvestor. “If an announcement comes, it will be after April 1.”

Mizuno's departure was long anticipated. He originally looked set to leave around September, only to have his term extended to the end of March, when Takahashi left. And reports emerged that he would leave late last week.

Mizuno had also been non-committal when AsianInvestor asked in November whether he wanted to keep the job: “I don’t know. To be honest, I only expected to do this job for two years when I joined.”

One thing that is certain is that Mizuno will have overseen an historic shift in the world’s biggest pension fund away from domestic bonds and into foreign and domestic equities and some alternative assets.  

He has also transformed GPIF into a highly active force for change, spearheading efforts to use artificial intelligenceperformance-based fees and relations with asset owner peers globally

In particular, Mizuno has been an outspoken advocate for ESG. Indeed, his last open letter from GPIF directly engaged with the topic

Observers believe this orientation will likely persist following his departure.

“The government will select a CIO who has positive views on the current vision,” said the Tokyo-based investment adviser, adding “I imagine they will aim at being the leading investor in ESG, AI and will go forward in private investment area”.

“I think we can expect GPIF to continue leading discussions on ESG and stewardship without reversing course,” agreed the Japanese investment executive.

“Mizuno-san’s focus on ESG compliance for GPIF’s fund managers has brought ESG to the forefront of other asset owners’ consideration when awarding mandates,” added Apic’s Sharp. “It would be ideal to… ensure that the implementation stage of [GPIF’s] ESG mandate is followed through intensively by their gatekeepers, fund managers and in terms of alternatives/ infrastructure exposures.”

While Mizuno's time at GPIF may have come to an end, his legacy looks set to persist.  

Richard Morrow contributed to this story. 

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