GPIF to Adopt Code to Prod Companies to Improve Returns

Japan’s government pension fund is adopting a state plan in which asset managers push companies to boost profits as the world’s largest pool of retirement savings seeks to increase its own investment returns.

The 128.6 trillion yen ($1.27 trillion) Government Pension Investment Fund will sign up to the nation’s new stewardship code, it said in a statement today. GPIF will create guidelines for its external stock managers for complying with the principles and evaluate their performance in doing so, it said. The plan aims to get companies to use capital more efficiently in a nation where return on equity is half the global average.

The Financial Services Agency finalized the code for asset managers in February based on a similar program in the U.K. Institutions that choose to ratify it must comply with seven principles or explain why they didn’t. Fund managers are expected to monitor and engage with companies, publish guidelines for how they do so, and disclose how they exercise their voting rights.

Sadayuki Horie, a senior researcher at Nomura Research Institute Ltd. who was named deputy chairman of GPIF’s investment committee last month, sat on the FSA’s council of external experts who advised on creating the rules.

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