* Seeks managers for inflation-linked bonds for first time
* Foreign bonds 10 pct of total portfolio of $1.26 trln
* Size of GPIF portfolio larger than Mexico's GDP
(Adds new fund strategy plans, names of current managers)
By Chikafumi Hodo
TOKYO, April 9 Japan's giant public pension fund
has issued a tender to hire asset managers to supervise its $101
billion portfolio of foreign bonds, expanding its investment in
the category beyond conventional bonds for the first time as it
seeks higher returns to cope with the country's ageing
The Government Pension Investment Fund (GPIF), the world's
largest, said on Wednesday it will seek managers for emerging
markets bonds, foreign high-yield bonds, and foreign
inflation-linked bonds. With total assets of $1.26 trillion, the
fund is bigger than Mexico's gross domestic product.
The move follows a recent series of changes in investment
strategies by and pressure from Prime Minster Shinzo Abe's
government to diversify investments and rely less on
low-yielding domestic bonds.
Currently, GPIF only uses Citigroup's WBIG and WGBI
indexes as benchmarks for its foreign bond investments.
On Friday, the public fund surprised the asset management
industry by dropping many Japanese managers while boosting the
numbers of foreign asset firms in its selection of supervisors
for its domestic equities portfolio.
Out of 14 newly appointed active managers for Japanese
stocks, only four were Japanese, sharply down from eight
domestic managers in the previous line-up. GPIF included
U.S.-based Taiyo Pacific Partners, which is known to be an
activist fund in the asset management industry, as a manager for
actively managed Japanese equity portfolio.
A panel appointed by Prime Minister Abe said in November
that GPIF and other public funds should seek higher returns by
diversifying into asset classes such as infrastructure as an
In February, GPIF said it had reached an agreement with
Canada's Ontario Municipal Employees Retirement System and
Development Bank of Japan to invest in infrastructure projects
through an investment trust fund.
Separately, the public fund started investments in emerging
markets equities in 2012.
The tender for foreign bonds closes on May 20 and the
selection process customarily takes about one year. The public
fund last held a tender for active foreign bond managers in 2006
and passive managers in 2010.
Current managers for actively managed foreign bonds include
AllianceBernstein, Goldman Sachs Asset Management and
Tokio Marine Asset Management.
For passively managed foreign bonds, managers include State
Street Global Advisors, BlackRock and Mizuho Trust and
(Reporting by Chikafumi Hodo; Editing by Dominic Lau and