Japan’s $1.2 trillion Government Pension Investment Fund is willing to ride out market turbulence, said its new head, who pledged to maintain the asset manager’s long-term strategy.
Norihiro Takahashi, 58, takes over as president of the world’s biggest pension fund from Friday. Being a responsible steward of the nation’s retirement savings is a top priority, Takahashi said at a press conference in Tokyo. GPIF should diversify across asset classes including non-traditional ones, he said.
Takahashi replaces Takahiro Mitani, who oversaw the fund for six years as it underwent a radical overhaul. GPIF reduced its allocation to bonds by about half in October 2014 and doubled equities, while the retirement savings manager has also started investing in alternative assets and sought to revamp its governance.
“For an organization to achieve long-term returns, they need to approach their portfolio management the same way," said Takahashi, speaking after the health ministry appointed him to the top job on Friday.
GPIF earned 3.6 percent in the December quarter, after suffering its worst loss since at least 2008 in the prior three months. Japan’s Topix index is down 16 percent in 2016 and the yen has strengthened more than 7 percent, suggesting the fund will post another loss in the first quarter.
Takahashi won’t push to manage stock investments internally after a proposal to do so was deferred, he said. He joins GPIF with a pedigree including managing a debt portfolio at Norinchukin Bank, an agricultural cooperative lender. He was most recently president of closely held JA Mitsui Leasing Ltd.
GPIF has started the process of creating a board of directors to diversify power away from the president, which requires legislative changes. The draft bill for the board is likely to be submitted to parliament this year.