Foreign firms shine again in R&I 2016 awards for DB managers

Rating and Investment Information Inc, along with sister companies Nikkei Inc and Quick Asset Management, have announced the winners of their annual Fund Awards in the defined-benefit pension category. There are three winners for each type of portfolio component.

To be considered for the award, a fund must among the top 75% of those in an annual quantitative evaluation of actuarial performance based on information ratios in the years ending March 2013, 2014 an 2015.

Foreign firms again do well this time with 15 of the 22 awards compared with 14 last time.

Nippon Comgest made a double debut with awards for its Japan Equities (in the Japan growth stocks segment) and its Global Emerging Markets Equities (under the emerging equity heading).

By contrast Mizuho Trust & Banking, Nissay Asset Management, Eastspring Investments and Invesco Asset Management (Japan) all made at least temporary exists from the lists.

Amundi Japan and Ashmore Japan made their first appearances with Amundi’s Yen Bond Active Strategy taking a place in the Japan bonds component and Ashmore’s Emerging Markets External Debt (Sovereign) showing up in emerging bond funds where Pictet’s Emerging USD Debt also appeared up for the first time.

On more traditional territory, Mitsubishi UFJ Trust & Banking’s joined Sumitomo Life Insurance and Sumitomo Mitsui Asset Management in Japan mid-and small-cap equity funds, taking a slot occupied last year by Goldman Sachs Asset Management.

The 2015 winners are shown in a separate table below after those in the latest round.

R&I Fund award 2016~2

 

 

 

 

 

 

 

 

R&I Fund award 2015

 

 

 

 

 

 

 

 

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

 

 

 

Posted in Articles | Leave a comment

Best practice on earnings disclosure — brokers take the lead

Five Tokyo brokerages are steering clear of the formerly widespread practice of allowing analysts to interview companies ahead of quarterly earnings announcements and share the  information gained with clients, according to a lengthy report by Bloomberg.

The firms are Credit Suisse and four of the top five firms in Nikkei Veritas’ annual ranking including Nomura Holdings Inc and Daiwa Securities Group Inc.

The absence of brokers comments on companies’ results before they are made known to the stock exchange has already led to announcements of unexpected numbers causing market volatility, Bloomberg finds – pointing to Toyota Motors as an example.

Japanese regulations allow listed companies to selectively make available whatever information they chose to whomever they chose so long as they do so without the intention of inciting a trade.

This requirement spills over the brokerages whose analysts can talk with customers about the information given to them but are banned from using the material to solicit trades.

Brokers will now need to rely more on their analysts’ abilities than on favours from the subjects of their probings and the shift comes at a time when firms in the sector have been finding it difficult to differentiate themselves from each other.

It is worth recalling that it is these analysts’ counterparts at fund management firms whom the government’s stewardship code requires to actively engage with investee companies in telling them how to run their businesses.

Annoyance about what would be regarded elsewhere as premature disclosures first broke out of Tokyo’s financial district — where the practice is well known — in August 2014 when Ben McLannahan of the Financial  Times wrote about the Nikkei newspaper (which now owns the FT) frequently publishing unattributed earnings previews that turned out to be identical with the official results.

The Tokyo Stock Exchange was then said to tighten some procedures in response but very little – if anything – changed on the ground.

While the moves by the quintet of brokers which have confirmed them so far are welcome, unless the Nikkei stops this practice their impact will be blunted. So too will any number of stewardship codes, corporate governance codes and the like.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment

Shift in GPIF allocation was to beat inflation not to boost stocks

A perceptive article in The Economist quotes Hiromichi Mizuno, chief investment officer of the 140 trillion yen Government Pension Investment Fund, as saying that a fundamental shift in GPIF’s asset allocation during October 2014 was made to prepare for Japan’s return of inflation — a move fundamental to Abenomics.

“We built a new portfolio allocation on a base case that the BoJ would generate 2% inflation within two years, but the base case may have changed”.

This raises more questions than it answers and pushes into plain sight the notion that GPIF is becoming primarily instrument of government policy – while suggesting that those who saw the shift as aimed at boosting the stock market are just a bunch of cynics.

If the inflation-at-2% argument was so telling why were other investors not piling into equities? Why did the massive civil service pension funds have to be ordered to change their allocations to match that of GPIF?

As a result of the new allocations the Fund is looking at loss for the year ending 31 March 2016 estimated at over 5tr yen and publication of its annual statement of assets has been deferred until 29 July — a move earlier described by GPIF spokesman Shinichirou Mori as ‘absolutely nothing to do with’ any need to wait until after elections for the upper house of the Diet earlier that month.

The Economist suggests that having been recruited from a  private equity firm in London, where he spent many years, Mr Mizuno had not expected is job to be so political.

The article ends by quoting the ever-talkative  Takatoshi Ito, ‘an adviser to the government on the fund’ who notes that:  Later this year … the powers of its board will be strengthened, making it easier to withstand public criticism about short-term losses.

How the transmission mechanism between the powers of the board and public criticism of its performance is supposed to work is not clear.

Moreover while any informed commentator can posit that a pension fund’s loss on a single year does not count for much over the long haul, such deficits matter much more when a fund is passed its tipping point — so will forever have more going out in benefits and it has coming in via contributions — and has for several years been dipping into its capital to make pensions payment which cannot be met from that year’s earnings.

GPIF should start publishing an annual report which includes not just its assets but also its liabilities.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

Posted in Articles | Leave a comment

Japanese investors route 74 trillion yen via Cayman Islands

Japanese investors are putting more money into Cayman Islands registered vehicles than ever before according to a report in the Asahi based in Bank of Japan balance of payment statistics.

Japn invest in CaymansThe newspaper pegs the amount routed through the British Caribbean colony at 74.4 trillion yen at the end of 2015 –up about 20% percent from a year ago — which as a destination for securities investment was second only to US at 165tr yen.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment

Segregated accounts gain the edge on pooled for plan sponsors

Trust banks and life insurance companies were managing 75,754.8 billion yen in pooled accounts for Japanese pension funds at the end of the financial year on 31 March 2015, according to the most recent annual analysis from Nenkin Joho, the fortnightly newsletter published by the Nikkei’s Rating & Investment subsidiary.Pooled v segregated 2009-2015

The amount is up 2.2% year-on-year and compares with the 10.86% rise, to 115,896.4bn yen, in the amount of pensions investments held in segregated accounts at asset management firms on the same date. Neither percentage rise can be read as a return on the capital and pooled accounts probably bore the brunt of the drawdowns which sponsors now need to meet rising benefits payments.

Pooled accounts appear to have become slightly less popular in recent years. In 2012 for every one yen invested under a segregated mandate 0.8946 yen was held in pooled. That number has now fallen to 0.6536 yen.

The decline may be due to the search for yield but a good portion it must arise out the swelling coffers of the Government Pension Investment Fund which does not use pooled accounts. Much of the growth at GPIF comes from its having taken over from corporate pension schemes responsibility for managing the contributions that fund daiko benefits for which the government, not employers, is ultimately responsible.

That change began in 2002 when so-called tax-qualified plans also began to shrink in number as they we ordered either to convert to covenant defined-benefit plans or wind up as they have now done. TQPs were big users of life insurer pooled accounts.

The life cos are junior partners to trust banks in the pooled business which last year saw a rare shift in the rankings when Mitsubishi UFJ Trust & Banking took over the number one slot from Sumitomo Mitsui Trust Bank when amounts in tokkin are included. Without tokkin SMTB would have been the leader with 133,579bn yen compared with MUFJ’s 125,601bn yen.Pooled accounts ranking 2013-2015

Note that in Japanese Sumitomo Mitsui Trust Bank is called Mitsui Sumitomo Trust Bank – yes; it does say a lot about the urge to unnecessarily complicate the system.

At 31 March 2015 US$1=119.99 yen

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

 

 

 

Posted in Articles | Leave a comment

Return on pooled pensions accounts at life cos goes below 2%

The return on corporate pension plans managed by life insurers in pooled accounts fell in the 12 months ended 31 March 2016 to just 1.75%, down 0.4% from a year earlier, says a somewhat confused article in the Nikkei.

Worse still “estimates show that pension products at major trust banks averaged a return of around negative 2.7% for fiscal 2015”.

And: “roughly 110 major corporate pensions surveyed by Rating and Investment Information averaged a return of negative 1.1% in fiscal 2015, for a loss of about 100 billion yen in asset value.”

Rating and Investment Information is the actuarial consulting  subsidiary of the Nikkei which publishes Nenkin Joho (pension information), a fortnightly newsletter, that surveys many elements of the industry.

Japan asset management market sizeWhile the accounts referred to at trust banks are presumably the pooled type, the report does not say whether the -1.1% number comes from company pension plans held in pooled accounts or those managed under specialist mandates awarded to asset management firms.

The newspaper goes on to claim that the poor performance has led Nippon Life Insurance and Dai-ichi Life Insurance, two giants in the pooled segment, to stop taking on new customers — though where these were likely to come from in a declining business is unclear.

This is the second time that the Nikkei has reported the supposed shut-out (see Feint signals that sokanji may be looking at a different future archive 22 April) and somewhere in the tangle a real story appears to be struggling to get out.

The number of customers using life cos’ pooled accounts has been falling for years due to competition from asset managers starting in the mid-1990s and from the abolition of so-called tax-qualified funds from the early 2000s.

The Life Insurance Association of Japan’s figures for the year to 31 March are due soon but in the 12 months before the number stood at 9,829 compared with 10,582 a year earlier.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment

Domestic equities levels in Post’s portfolios barely budge

For all the talk of Japan Post Bank and Japan Post Insurance injecting whale-size demand into the Japanese stock market the just-published results of two tell a different tale.

Beware: The tables below are taken from the annual reports in which the order of years is transposed. Text continues beneath

Japan Pos tBank portfolio at 31 March 2016

Japan Post insurance portfolio at 31 March 2016 2

At Post Bank Japanese equities accounted for 0.9%, or 1,878.6 billion yen, of holdings at 31 March compared with 1.0% 12 months prior while at its insurance company sister they made up 1.5%, or 1,202.5bn yen, compared with 1.2% a year before.

The two portfolios’ fixed income investments show similarly slow progress in diversifying  away from Japan Government Bonds (JGBs) with foreign bonds now accounting for 9.6%, or 19,829.5bn yen, at Post Bank. up from 9.1% last, and for 4.9%, or 3,969.7bn yen, at    Post Insurance where they were 2.5% a year ago.

At 44,178.6bn yen JGBs remain at over 50% of Post Insurance’s portfolio while they are now down to 40.1%, or 82,255.6bn yen, at Post Bank where they were a whopping 51.8% last time.

The foreign stocks component continues to be nugatory at Post Insurance but at Post Bank the value of ‘foreign securities investment trusts’ almost doubled from 6.7%, or 13,967.7bn yen, last time to 12.4%, or 25,520.9bn yen at 31 March this year.

In January this year the Japan Center for Economic Research included a look at the two postal giants’ portfolios in Risks from extending the QQE policy – Bank of Japan’s purchases to reach limits in June 2017. This report is no longer listed on the JCER web site but a Google search locates it here.

Reuters’ coverage of Japan Post’s poor profits prospects is here and of the earlier plan to boost holdings of risk assets here.

 © 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

 

Posted in Articles | Leave a comment

Tough year for investment trust firms comes to a close

ITA nos 2016-3-31Assets under management in stock and bond funds offered publicly by Japan’s investment trust companies fell 0.79% to 92,428.5 billion yen in the financial  year ending 31 March 2016, figures from the firms’ trade body show.

Nomura still rules the roost with 22,952.7bn yen, 1.34% down on the same date in 2015, followed by Daiwa Asset Management at 13,403.9bn yen, 6.57% down.

Then comes Mitsubishi UFJ Kokusai Asset Management, a combination of the two companies whose names it incorporates which were ranked fourth and fifth last time. In consequence of this merged entity moving up to third place Nikko Asset Management dropped to fourth ranking with 9,889.4bn yen, a 4.58% decline on last time.ITA growth nos 2016-3-31

The first firm in the overall ranking to show positive growth is Sumitomo Mitsui Asset Management which rose just 0.59% to reach 2,406.2bn yen. Far more positively, twelfth ranked Nissay Asset Management jumped 20.06% to 2,031.1bn yen.

Bigger still bounce-backs came  from Sparx Asset Management, which shot from 55th to 40th in the main league table, with a 314.08% improvement to reach 113,084bn yen and Rheos Capital Works which rose from 51st to 41st with growth of 147.4% to 111,196bn yen.

ITA nos 2016-3-31In terms of managing privately placed stock and bond funds Sumitomo Mitsui Trust Asset Management  is at the top of the ladder followed by Blackrock, Pimco and DIAM.

Longer versions og these league tables will appear later under the ‘Rankings’ tab atop this page. 

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment

Pension funds buy into Tokyo real estate via OakTree

Japanese pension funds are among the investors in a Tokyo-focused fund managed by GreenOak Real Estate which  attracted $655m from US dollar and yen-denominated investors before it closed in February, according to I&PE Real Estate.

The GreenOak Asia II vehicle is targeting assets in the Tokyo Metropolitan area.

The Japanese investors are not identified.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment

Japanese life insurers’ appetite for US takeovers not sated yet

(Bloomberg) — Japanese insurers made more than $18 billion worth of acquisitions in the U.S. last year, and their spending spree isn’t over yet, industry dealmakers said Tuesday.

Japan has a number of large, healthy insurers facing dim growth prospects at home, a panel of investment bankers said during a mergers and acquisitions conference in New York hosted by law firm Mayer Brown. The country’s aging population, devalued currency and low rates pressuring returns are all stunting domestic development, they said.

These dynamics have spurred a wave of Japan-to-U.S. insurance dealmaking that’s yet to crest, they said.

For the full story please see.

The currency is not so ‘devalued’ at the moment but a rising yen makes US$-denominated acquisitions cheaper.

© 2016 Japan Pensions Industry Database/Jo McBride. Reporting on, and analysis of, the secretive business of Japanese institutional investment takes big commitments of money and time. This blog is one of the products of such commitment. It may nonetheless be reproduced or used as a source without charge so long as (but only so long as) the use is credited to www.ijapicap.com and a link provided to the original text on that site.

This blog would not exist without the help and humour of Diane Stormont, 1959-2012

Posted in Articles | Leave a comment