Japanese Government Pension Investment Fund (GPIF), the world's largest pension fund with $457bn, is...
Japanese Government Pension Investment Fund (GPIF), the world's largest pension fund with $457bn, is to look into hedge funds when reviewing its policy asset allocation in autumn, according to Noboru Terada, the fund's Tokyo-based executive investment officer.
"We are looking to start hedge fund investments with limited size and to apply the hedge fund strategy to co-ordinate with the existing investment policy," Terada said.
Though its executives are looking into the asset class, the GPIF will become an independent agency in April 2006, and its hedge fund investment policy is likely to be decided after that, he added.
"After April next year, the new organisation will decide on the investment policy, including hedge fund investment. Because our fund has huge assets, it is difficult to give a lot of money to active managers," said Terada. "We hire a limited number of active managers who we have confidence in but active exposure is limited. We cannot have any market impact when investing passive index funds."
The GPIF was set up in April 2001 as part of an overhaul of the country's public pension scheme. Before this, little was known about how its predecessor, the Pension Welfare Services Corporation chose and evaluated its external managers. Terada introduced transparency into this process by reviewing the contracts with outside managers.
The fund now openly invites managers to bid for mandates and announces the results on its website. Every manager's performance is ranked and the fund even discloses the fees paid.
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