GPIF reveals portfolios of alternative investment for the first time
Government Pension Investment Fund, Japan (GPIF) has released its portfolio for alternative investment in the investment results for fiscal year 2017.
The pension listed its annual rate of return as +6.9 percent, with AUM of JPY156.4 trillion ($1.48 trillion).
GPIF’s diversified investments have been centered on “core” infrastructure assets that can offer stable income gains. Total investments are JPY213 billion ($2 billion) as of end of March 2018 (end of the fiscal year 2017).
GPIF’s first infrastructure investment was in 2014, carried out as an investment partnership with the Canadian public pension OMERS and DBJ. Public records show that the aim of the infrastructure investment was to invest with more experienced partners thereby gaining professional knowledge. In their summary, they have listed two case studies from their investment through this partnership. It is named as GLOBAL ALTERNATIVE CO-INVESTMENT FUND I, and the value of investment was JPY146.6 billion ($1.38 billion):
- Thames Water: The largest U.K. water and sewer company that covers London and its surrounding cities. As this infrastructure is considered indispensable for the lives of the citizens, it can provide stable interests returns.
- Port of Melbourne: Melbourne Harbor is the largest container port adjacent to the city center, functioning as an important base for Australian logistics.
GPIF has also been investing in fund of funds (FOF) through Pantheon ($101 million) and StepStone ($361 million) during the fiscal year 2017. GPIF listed the case study of its investments into Birmingham airport and Bristol airport.
At the end of the fiscal year 2017, GPIF listed the total amount of infrastructure investment at JPY196.8 billion ($1.86 billion). By country, the proportion of investments is largest in the United Kingdom at 57 percent, 15 percent in Australia and Sweden, 10 percent in Spain, and 3 percent in Finland. For infrastructure investment types, seaports were the highest at 27 percent, followed by water and sewage companies at 24 percent, airports at 21 percent, electric power at 18 percent, and oil pipelines at 10 percent. GPIF aims to make stable income in core, diversified infrastructure assets.
For real estate investments, at the moment GPIF is focused on seeking out core funds. GPIF began investments in 2017 through FOF with Mitsubishi UFJ Trust and Banking for Japanese core real estate.
The investments were to domestic private REITs (open-ended core funds for institutional investors), and GPIF was investing to eight private REITs out of 23 private REITs in Japan, and total value of portfolios was about JPY8.1 billion ($76 million).
The eight private REITs were BROADIA, DBJ, DREAM, MITSUI FUDOSAN, NIPPON OPEN ENDED REAL ESTATE INVESTMENT, NIPPON TOCHI-TATEMONO, NOMURA REAL ESTATE, and SG ASSETMAX. The pension fund is expected to invest in more private REITs, and increase its investment amounts as well.
By sector, GPIF’s investments to office represents 40 percent, logistics is 23 percent, residential is 19 percent, retail is 15 percent, and others is 3 percent.
GPIF is currently in the selection process for its overseas FOF investments.
