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GPIF, University of California CIOs talk manager fees, ESG at Milken conference

Hiromichi Mizuno
Hiromichi Mizuno

The chief investment officer of Japan's ¥144.8 trillion ($1.3 trillion) Government Pension Investment Fund said Wednesday that the fund is in the process of renegotiating fees for its four dozen or so external equity managers.

“We will only pay for alpha,” Hiromichi Mizuno said on the panel, “Charting New Frontiers in Asset Ownership” at the Milken Institute Global Conference in Beverly Hills, Calif.

Speaking after the panel to Pensions & Investments, Mr. Mizuno said the contracts were being renegotiated to ensure that the Tokyo-based pension fund does not end up paying for the money manager's standard operating costs. He would not elaborate, saying the details of the negotiations were confidential.

He said equity investments make up about of half of the pension fund's overall portfolio.

During the panel discussion, Mr. Mizuno said the pension fund is asking external managers to take into account environmental, social and governance factors as they determine which stocks to buy.

Another panelist, Jagdeep Singh Bachher, chief investment officer of the University of California Regents, said he received a phone call from staffers upon arriving in Los Angeles Wednesday morning that his office was being occupied by students, calling for the university to divest its holdings in fossil-fuel companies.

Mr. Bachher — who oversees $97 billion for the university, including its endowment, pension plan and other investment pools — said he told staff to send the police away and instead order “pizza and coffee” for the students. He stressed that continuing dialogue was needed.

Mr. Bachher has said in the past that he opposes full university divestment from fossil-fuel companies, but disclosed during the panel that the university has sold $350 million in fossil fuel holdings.

He said even Saudi Arabia is looking ahead as to what will happen to oil long term and working on diversifying its economy. “It makes sense we need to diversify our holdings,” he said, noting the university has to have 20-, 30- and 40-year plans for its energy holdings.

Mr. Bachher did not offer a time frame for the fossil-fuel stock sales.