Japan’s GPIF unveils fund manager winners and losers

BlackRock, Morgan Stanley, Northern Trust and Sumitomo Trust & Banking all saw big drops in the assets they manage for the $1.46 trillion Government Pension Investment Fund in the last fiscal year.
Japan’s GPIF unveils fund manager winners and losers

Japan's Government Pension Investment Fund suffered a 5.31% drop in its assets under management to ¥116.3 trillion ($1.46 trillion) from ¥122.8 trillion in the year to March 31*. This indicates underperformance by some of the asset managers – internal or external – working for the world’s biggest institutional investor.

The GPIF’s latest annual report to March 31 lists the amount of AUM each of its fund managers gained or lost over the financial year, but it does not specify whether that incorporates the loss or gain of portfolio mandates. (However, some of the AUM changes are so substantial that they clearly reflect more than market movement or investment skill.)

Nonetheless, the rankings – comprising 28 external managers, 11 of which are Japanese – make for interesting reading.

The biggest loser in terms of AUM was Sumitomo Trust & Banking, with a 21.5% drop to ¥11.64 trillion from ¥14.83 trillion, pushing it down to third from top in the ranking of external managers by AUM.

Next came BlackRock, with a 17.4% fall to ¥11.4 trillion from ¥13.8 trillion, dropping it to fourth place by AUM, though it remains the leading foreign firm on the list, ahead of State Street Global Advisors with ¥3.19 trillion.

The third and fourth biggest AUM drops were for Northern Trust and Morgan Stanley Investment Management, with huge percentage falls of 68.3% and 80.6%, respectively. Northern Trust’s AUM fell to ¥1.10 trillion from ¥3.46 trillion, and Morgan Stanley’s to ¥391 billion from ¥2.02 trillion.

Axa Rosenberg was the only external manager to drop from the list entirely, having been on the roster for a decade, notes the Japan Pensions Industry Database (JPID). However, it had only managed a relatively small ¥116 billion in assets.

GPIF’s own internal investment team – which manages over a quarter of the total assets – also suffered, posting a 7% drop in AUM to ¥30.9 trillion from ¥33.2 trillion. Given this result, it is interesting that the pension fund recently expressed a wish to reduce the number of external firms it uses.

Of course, there were also winners, but the only firms to see AUM rises of any real significance were domestic managers. This suggests that the vast majority of – if not all – mandates awarded during the year went to Japanese companies.

Mitsubishi UFJ Trust & Banking posted a 32.8% rise in AUM to ¥11.73 trillion from ¥8.83 trillion, moving it up to second from sixth place in the list of external managers. Chuo Mitsui Asset Trust & Banking topped the table with a 14.4% increase to ¥13.28 trillion from ¥11.60 trillion.Mizuho Trust & Banking rose to fifth from sixth place, with a 13.1% increase in AUM to ¥11.30 trillion.

Ultimately, the list of 27 firms is not fundamentally different from what it was 10 years ago, though many of the local and foreign names have changed through mergers, notes the JPID.

*An English-language version of the figures is available from the Japan Pensions Industry Database.

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