Noritz Pension plans pivot to active managers on downturn expectations

The Japanese corporate pension fund is preparing for a drop in the global economy that its CIO believes will spur opportunities in both public and private markets.
Noritz Pension plans pivot to active managers on downturn expectations

A “bubble-like” scenario brewing in global financial markets has spurred Noritz Corporate Pension Fund to prepare for emerging opportunities in the aftermath of potential turmoil.

Kiyoshi Iwashina
Noritz Corporate Pension Fund

“I think we are seeing a bubble-like situation compared to the actual macroeconomic situation, especially when considering the high interest rates and high levels of inflation,” Kiyoshi Iwashina, chief executive officer and chief investment officer at Noritz, told AsianInvestor.

Iwashina is therefore keeping around 20% of the fund’s assets under management in cash or short-term assets in preparation for any emerging distress in global financial markets.

“From now on, I prefer to invest in actively managed investment vehicles because based on my outlook for the equity market, maybe there could soon be a great price correction. At that time, stock picking could help achieve great performance,” Iwashina said.

Given this outlook, he will also focus on products that can be shorted, such as hedge funds.

Iwashina manages the defined benefits pension scheme with an annual return target of 3% for domestic employees at Noritz, a Japanese corporation primarily known for producing tankless water heaters for industrial and private home use.

In the year ending March 31, the pension fund made a return of 9.7%.


Another reason for accumulating this cash is the outlook for private assets.

Private markets rose significantly during the period of low interest rates following the global financial crisis. As rates climbed, the industry began to accumulate a lot of dry powder.

Iwashina does not believe that buying flows will stop in 2024 and cause a significant drop in private asset prices. However, he expects that such a phase could come in the not-too-distant future, possibly within two years.

“Like the activity in the public market, I believe that we are experiencing a somewhat bubble-like situation in this private asset markets. In such a case, I would like to invest in products that offer significant profit opportunities, focusing on secondaries funds in or distressed funds,” Iwashina said.

In the year ending March 31, Noritz had 28.6% and 17.5% of the total AUM invested in foreign fixed income and equities, respectively, while domestic fixed income and equities only made up 5.9% and 1.8%.

Hedge funds and multi-asset investment accounted for 14.6% and 7.3%, respectively, while the rest was in cash or short-term assets (20.2%) and the general account (4.2%).


While financial markets had expected, and even priced in, several interest-rate cuts by the US Federal Reserve in 2024, Iwashina long held the view that inflation was far stickier than most had foreseen or perhaps had hoped for.

He also believes that higher interest rates will be a new normal for a longer period, with one or maybe two rate cuts at most by the Fed this year.

Also read: Market Views: Will the Fed hike or cut rates next?

“The major factors behind the global inflation that has been in place for the past nearly 30 years have changed 180 degrees,” Iwashina said.

Among the major factors he sees is a resurgence of the Cold War structure, since “recently it is more a ‘Hot War’ situation, especially in Ukraine and the Middle East”.

He also sees a scale-back of globalization due to the Covid-19 pandemic and geopolitical tensions, and reliance on monetary easing that has now ended.

Iwashina said his biggest concern is the markets’ perception of the inflation outlook, which he finds too optimistic.

“Most people working in Wall Street and financial markets in their 30s or 40s might not remember the latest inflation era. An old-timer like me believes it is a very risky situation, so we are watching the financial markets for the risk of such a tragedy in the relatively near future,” Iwashina said.

At the end of the full-year 2023, Noritz Corporate Pension Fund had assets under management worth ¥25.1 billion ($165.6 million.

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