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Pension Funds

GPIF helping overseas managers to navigate Tokyo

Hiromichi Mizuno, chief investment officer of Japan’s Government Pension Investment Fund

If a focus on beta has left the Government Pension Investment Fund aiming for broad-based, systemic change, Hiromichi Mizuno, the fund's chief investment officer, said he's also worked — directly in some cases and indirectly in others — to make Tokyo an easier place for foreign asset managers to navigate.

For starters, Mr. Mizuno, in a Nov. 13 interview, said he's effectively made English the giant pension fund's second language.

"If somebody (in Japan) wants to be a professional in investments, being bilingual is a prerequisite … because the information we can get in Japanese is probably 20% of what we can get in English. It's just a reality," he said.

So, "I don't compromise. Every meeting with a foreigner has to be done in English," said Mr. Mizuno. That's admittedly "tough for some staff" but an essential ingredient to becoming a global player, he said.

That policy does more than make for more efficient meetings by dispensing with the need for translators. It also makes it easier for foreign firms to operate independently, as opposed to serving as subadviser to a Japanese asset manager that would handle much of the interfacing with the 156.8 trillion ($1.4 trillion) GPIF.

One of the reasons GPIF needed to have a Japanese manager as gatekeeper in its relations with overseas managers is that "we needed a translation of the information," but the fund is working now to make that unnecessary, said Mr. Mizuno.

More recently, GPIF began using the "manager registration" system it launched in April 2016 — to maintain an up-to-date list of investment strategies the fund could tap rather than going through a cumbersome RFP process — to alert Japan's Financial Services Agency about promising overseas managers looking to obtain licenses to set up shop in Tokyo.

Mr. Mizuno said GPIF added an "information-only" registration for its manager registration system to allow overseas managers without licenses to register with the GPIF. That left the fund in a position to "pre-screen" and "introduce" solid managers seeking a license to the FSA and the Tokyo metropolitan government – a positive sign for the regulators.

Mr. Mizuno said GPIF has flagged a handful of firms to the FSA, citing Legal & General as one example. The firm got a license within three months, considerably faster than its expectations, he said.