Japan’s GPIF Seeking Active and Passive Managers for Foreign Bonds

The Government Pension Investment Fund (GPIF) in Japan is aggressively seeking active and passive managers of foreign bonds to diversify its portfolio beyond low-paying Japanese bonds.

The world’s largest pension fund is seeking broad asset managers with access to various benchmarks, such as corporate high yield indexes, emerging market indices, and aggregate indexes, the GPIF said.

On Monday, the pension fund also said it is considering appointing a new fund of fund (FoF) manager for infrastructure assets in emerging markets.

The pension plan is soliciting information on FoF managers with a “preferable” investment scheme for GPIF, including gathering data on their market size, return, and track record.

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The moves are the latest in a series of developments at the Japanese pension fund, which is changing up its investment strategy as the country lurches toward a recession. Hard hit from the coronavirus, the Japanese government passed a $1 trillion rescue package to salvage the economy.

Last week, the pension fund said it has created its own data and analytics portal to boost its oversight of index providers.

The GPIF, which is forbidden from managing most of its assets in-house, is instead hoping to find better opportunities within passive management, such as around index rebalancing.

The pension fund also increased its allocation to foreign bonds. On April 1, GPIF increased its target allocation for foreign bonds to 25%, up from 15% in March. Japanese bonds are decreasing in value, thanks to lower interest rates.

The pension system typically owns one-tenth of Japanese equities and 1% of global equities.