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Japan's giant public fund picks 15 managers to invest JGBs
October 1, 2012 / 10:40 AM / 5 years ago

Japan's giant public fund picks 15 managers to invest JGBs

TOKYO, Oct 1 (Reuters) - Japan's public pension fund, the
world's biggest, has selected 15 external money managers to
oversee Japanese bond investments in its portfolio, the public
fund said on Monday, in a move aimed at boosting returns to cope
with a rapidly ageing population.
    The Government Pension Investment Fund, known as the GPIF,
has $1.39 trillion in assets, bigger than the size of the
Australian economy. It invests the reserves of national and
corporate pension plans.
    The GPIF has already started to diversify its investments in
search of better returns. For the first time ever, it committed
money to emerging markets equities earlier this year.
 
    It held about 70.2 trillion in Japanese government bonds, or
about 65 percent of its 108.2 trillion yen portfolio as of June.
   Out of the total in domestic bonds, 57.5 trillion yen are
managed by asset managers and the GPIF. The rest is held under
the Fiscal Investment and Loan Program (FILP).
    The GPIF itself managed about 15 percent of domestic bond
investments as of end-March.
    The public fund selected a total of six managers to
passively manage Japanese bonds, while it appointed nine
managers for active investments in the asset class. It had
issued a public tender last year to select the new managers of
domestic bonds.
    Mitsubishi UFJ Trust and Banking, State Street Global
Advisors, part of State Street Corp, and Resona Bank
 were appointed as new managers for the GPIF's passive
investment portion.
    BlackRock Inc, the world's biggest money manager, 
which oversaw about 5.7 trillion yen ($73.26 billion) in passive
domestic bond investments for GPIF as of end-March, was not part
of that list. BlackRock continues to manage other investments
for GPIF.
    A total of four new managers, including Pimco and Prudential
Investment Management, were selected as active managers of
Japanese bonds. Previous managers in that asset class whose
names were missing from the GPIF list were Nikko Asset
Management, Nomura Asset Management, Meiji Yasuda Asset
Management and Resona Bank.
    BlackRock, Nomura Asset, Nikko Asset and Resona, which won a
mandate for passive investment, declined to comment, saying they
 don't comment on client activities. Meiji Yasuda Asset was not
immediately available for comment.
    The GPIF suffered a $26 billion decline in its portfolio
value in April-June, its first fall in three quarters, as the
yen's strength and falls in domestic and foreign equities hurt
its quarterly performance. 
    The public fund's investment in Japanese bonds produced a
positive return of 1.04 percent, or a 604.1 billion yen
investment gain.
    The pension fund makes allocations in line with its model
portfolio, which gives a weighting of 11 percent to domestic
stocks, 67 percent to domestic bonds, 9 percent to foreign
stocks, 8 percent to foreign bonds and 5 percent to short-term
assets. 
    The public fund last selected active managers in the 2004/05
financial year, while this was the first time the fund selected
new passive managers through a tender, a GPIF official said.
    
    Following is the list of managers (new companies indicated
by asterisk*): 
    
    1) Passive investment (benchmark: Nomura BPI excluding ABS)
    *State Street Global Advisors
    Mizuho Trust and Banking
    Sumitomo Mitsui Trust Bank
    
    2) Passive investment (benchmark: Nomura BPI JGB)
    *Resona Bank
    Sumitomo Mitsui Trust Bank
    *Mitsubishi UFJ Trust and Banking 
    
    3) Active investment (benchmark: Nomura BPI excluding ABS)
    *MU Investments
     Diam Asset Management 
     Tokio Marine Asset Management
    *Pimco Japan 
    *Prudential Investment Management Japan
    *Manulife Asset Management 
     Mizuho Trust and Banking
     Sumitomo Mitsui Trust Bank
     Mitsubishi UFJ Trust and Banking

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