Huge Japan pension researches alternatives

The $1.4tn Japanese pension fund has hired four firms, including Capital Dynamics, to research how it can invest in alternatives, including private equity.

Japan’s Government Pension Investment Fund, which manages $1.4 trillion, has selected four firms to carry out research on how it should invest in alternative assets, including private equity, real estate and infrastructure, according to a source close to the matter. 

A document on the GPIF website showed Brightrust PE Japan, Capital Dynamics, T&D Asset Management and law firm Atsumi-Sakai were the four firms commissioned to do the research, which the source said will address a number of topics related to investing in alternatives, including the manager selection procedure, due diligence and portfolio construction. Each firm will focus on its “respective expertise”, although there will be some overlap, the source confirmed. 

The research period is officially until the end of February 2013, but will likely continue through March. 

Japan: Big
pool of money

The source emphasised it is a feasibility study in order to form a proposal to GPIF’s investment committee and not a study on individual fund managers. However he explained, “The fact they have selected as many as four researchers to do very major research means [GPIF] is very seriously thinking about these implementations.”

Japan-focused independent investment advisor Brightrust has now welcomed suggestions from its readers of “how best [a] large and conservative Japanese pension fund can develop a new investment programme targeting private equity, infrastructure and real estate,” according to its website. 

Japan’s institutional investors are typically very conservative, mostly investing in government bonds, sources say. A step into alternative assets would have a “very big” impact on private equity, managing director at Michael Chae told PE Asia earlier. “[GPIF] manages over $1 trillion – [even a] 1 percent allocation to private equity would be huge.”