NRI and Cerulli Associates Predict GPIF to be Unshackled by Japan’s Pension Fund Reforms

Tokyo and Singapore – 17 December 2014

Foreign asset managers with compelling, distinctive investment strategies could see more opportunities 

Japan’s pension funds’ asset management reforms will enable the Government Pension Investment Fund (GPIF) to individually set its own operational targets in accordance with its individual objectives, according to a joint report from Cerulli Associates and Nomura Research Institute, Ltd (NRI) entitled Asset Management in Japan 2014: Winning Assets.

The reforms will help GPIF become more dynamic and better equipped to deal with the imperatives of asset allocation, portfolio diversification, risk management and corporate governance amid a post-deflationary economic environment.

“For instance, in terms of hiring, the GPIF will not be shackled by low salaries and will be better positioned to recruit top-notch talent. This will add more quality to its external manager selection processes,” says Yoon Ng, Asia Research Head for Cerulli Associates.

With GPIF’s risk tolerance now defined as the probability of a portfolio entirely invested in domestic bonds failing to earn returns at least equivalent to the wage inflation rate in Japan, it has decided to revise its policy asset mix in recognition that earning returns in excess of the wage inflation rate is now its investment target.

It recently increased its total equity allocation from 24% to 50% and also raised its foreign bond allocation by four percentage points.

“With public pension fund reforms in place, the GPIF, which hopes to outperform its policy asset mix, may show a stronger tendency to hire managers with highly distinctive investment strategies that are differentiated from and relatively uncorrelated with other companies' strategies,” says Atsuo Urakabe, Senior Researcher at NRI.

Asset Management in Japan 2014: Winning Assets is a collaboration between Cerulli Associates, a research firm specializing in global asset management and distribution trends, and NRI, a leading provider of consulting services and system solutions.

GPIF’s Revised Policy Asset Mix

Source: Nomura Research Institute


Old Asset Mix

New Asset Mix

Japanese bonds



Foreign bonds



Japanese equities



Foreign equities






Asset Management in Japan 2014: Winning Assets is a joint report by Cerulli Associates and leading think tank and consultancy in Japan, Nomura Research Institute (NRI). It analyses the Japanese investor landscape to examine opportunities foreign managers can exploit in this mature Asian asset management marketplace. Harvesting NRI’s rich quantitative and qualitative insights, this report provides analysis of key client segments--retail pension funds, banks, and insurers. The report also presents the competitive landscape and highlights subadvisory opportunities for asset managers.

Data in this research is entirely sourced from Nomura Research Institute and, where applicable, based on its interpretation of third-party data. Its value cannot be underestimated as access to information only available in Japanese is extremely limited.

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