Japan Pension Wants United Fund | Chief Investment Officer

(June 30, 2010) — The head of Japan’s Government Pension Investment Fund (GPIF) of Japan, the world’s biggest public pension fund whose 122.5 trillion yen ($1.35 trillion) in assets under management is greater than India’s GDP, rejected a proposal to split the fund to achieve higher returns, Reuters reported.

Takahiro Mitani, president of the fund, told the Reuters Japan Investment Summit on Tuesday that despite aims to achieve greater transparency, splitting the GPIF into two asset management bodies — one for safe assets and one seeking higher returns — would be inappropriate and inefficient. He said the divided fund would require more staff and raise costs. The fund currently consists of about 80 people. “If we compare that with other public pension funds overseas, we are highly efficient,” Mitani told Reuters.

In spite of the pension’s relatively conservative investment approach, the GPIF suffered a 9.7 trillion yen loss in the fiscal year ended March 2009. The fund’s head has said he believes the GPIF should continue its investment in safe assets rather than new asset classes, but added the fund is always investigating the possibility of diversifying its investments. Currently, the pension holds about two-thirds of its assets in yen bonds – its target portfolio consists of a 67% allocation to domestic bonds, 11% to domestic stocks, 9% to foreign stocks, 8% to foreign bonds and 5% in short-term assets.

In related news, Japan’s public fund said Wednesday that gains in domestic and international shares boosted the GPIF’s performance, lifting the rate of return on its investment to plus 7.91% in the 2009/10 financial year, compared to a record loss of 7.57% the previous year.

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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(June 29, 2010) — The California Public Employees’ Retirement System (CalPERS), the largest US pension, and a handful of other Lehman Brothers Holdings Inc’s creditors said they object to the investment bank’s Chapter 11 bankruptcy plan. With $639 billion of assets, its bankruptcy is six times larger than any other in U.S. history.

In a filing in Manhattan bankruptcy court on Tuesday, the group of a dozen hedge funds, pension funds and asset managers said Lehman’s current bankruptcy plan to establish a “pot of assets” to pay back creditors is “seriously flawed” and would cause conflicts, Reuters reported. The group said the plan would result in unnecessary lawsuits while delaying the deserved recovery of tens of billions of dollars.

The creditors, which includes the $211 billion CalPERS and Paulson & Co, a $35 billion hedge fund firm run by billionaire John Paulson, said they are owed a total of $15.5 billion. On April 14, Lehman, which has trimmed claims to about $700 billion from more than $1 trillion originally, said it is offering creditors recoveries ranging from 14.7 cents on the dollar to 44.2 cents.

Bryan Marsal, one of the founders of the restructuring firm handling Lehman’s Chapter 11 case, told the Wall Street Journal that Lehman’s compromise plan provides a fair, just and efficient resolution to the bankruptcy case. “While some creditors might have an advantage in substantive consolidation, others would be significantly disadvantaged,” said Marsal to the WSJ. “As a result, this approach would require substantial time and expense–including costly multi-jurisdictional litigation that would take years to resolve and have an uncertain outcome.”

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The additional creditors in the group are Canyon Capital Advisors LLC, Fiduciary Counselors Inc, Fir Tree Inc, Fortress Credit Opportunities Advisors LLC, Gruss Asset Management LP, King Street Capital Management LP, Owl Creek Asset Management LP, San Mateo County in California, Taconic Capital Advisors LP and Western Asset Management Co.

Since Lehman filed for bankruptcy protection on September 15, 2008, more than 65,000 claims have been filed by creditors against Lehman entities.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742