GPIF invites passive domestic equities firms to join register

A registration system for asset managers which the Government Pension Investment Fund’s announced last year made its debut yesterday when passive managers of Japanese equities were invited to submit their details by 27 March.

Next in line for sign-up are firms that wish to be considered for active or passive management of non-Japanese stocks.

The document outlining the details which applicants for registration will be expected to submit notes that the purpose of the scheme is ‘to have more flexibility on Manager Selection and to have access to new investment idea and expertise of Asset Managers’. It makes no mention of GPIF’s wish to ‘strengthen our stewardship activities’ but this desire sets the context of yesterday’s invitation to passive managers where it appears as the first line.

The Fund sees itself as something of a standard bearer for an active stewardship style in which asset managers engage with corporate managements to tell them where they are going wrong. GPIF has been clear that it expects no less engagement when a company’s stock is held as part of a passive strategy and is not selected on any inherent merits.

Fund staff are also on record as wishing to bring some equities management inhouse.

Firms seeking registration will need to have been approved to do business in Japan under the country’s Financial Instrument and Exchange Act and to be already managing 100 billion yen on behalf of foreign or local pension funds.

Once on the register the firms will be expected to submit monthly performance data.

The details which GPIF has published so far do not include any assurances that data submitted will be kept confidential or any information on who will have access to the register.

This could present problems if the Fund’s reviews of applicants’ investment processes requires them to reveal details of their stock selection structures, though some of these will already have intellectual property protection.

The introduction of the scheme is a reflection of just how hard it is for an institutional investor in an age of low yields and high market volatility to be in possession of all the data on suppliers and strategies that it needs to navigate toward its goals.

For who currently managers what and how for GPIF see under ‘The Giants’ tab at the top of this page.

© 2017 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

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