Japan’s ¥163 trillion ($1.5 trillion) Government Pension Investment Fund is adjusting its fee structure in an effort to encourage alignment of interest via outperformance and multi-year mandates with its asset managers, and discourage underperformance, according to a GPIF Working Paper released this week that outlines GPIF’s thinking behind the new fee structure. And as the largest pension fund in the world, actions by GPIF help set the investment tone for pension funds around the world with similar allocation strategies, particularly those based in Japan.
Between fiscal year 2014 to 2016, the pension fund noted only a small portion of GPIF’s roughly 20 percent of actively managed assets achieved the target excess return rate. While the ability of GPIF to properly select managers is thought to be part of the problem, the pension fund also believes the target excess retur
