Japan’s GPIF hands CIO role to Goldman Sachs veteran

Continuity in asset allocation and investment strategy is widely expected at the world’s largest pension fund as it replaces Hiromichi Mizuno with an experienced banker.
Japan’s GPIF hands CIO role to Goldman Sachs veteran

Japan’s $1.5 trillion Government Pension Investment Fund today (April 1) unveiled the eagerly awaited appointment of its new chief investment officer, on the same day as its new president started and it revealed a new policy portfolio.

Eiji Ueda, the former co-head of Goldman Sachs’s Asia-Pacific securities division, has taken on the role vacated by his hugely progressive predecessor Hiromichi Mizuno yesterday.

In the five years under Mizuno, GPIF had become a significantly more international investor and an Asian – and arguably global – standard-setter in environmental, social and governance (ESG) investment.

Industry observers widely expect it to be business pretty much as usual as regards portfolio and investment strategy under the new incumbent.

Hiromichi Mizuno

“I do not see the new CIO taking the scheme in a differing direction in terms of asset allocation aspirations,” said a Hong Kong-based senior asset management executive who has worked closely with GPIF.

Certainly, the latest changes point towards continuity and stability.

The fund’s new president, Masataka Miyazono, also started today, just as it unveiled its five-year plan containing a mid-term strategy and a new policy portfolio. Like his predecessor, Norihiro Takahashi, he was an executive at Norinchukin Bank.


GPIF’s biggest planned portfolio change is a major shift away from Japanese bonds. It has confirmed a reduction in its target allocation to 25% from 35%, and an increase in the allocation to foreign bonds to 25% from 15%. This signals a huge planned transfer of some $150 billion from local to overseas fixed income.

“The allocation to domestic bonds… has decreased due to declining interest rates and lower bond yields in Japan, while the foreign bond allocation has increased due to the relatively higher interest rates on these instruments,” the fund said in a statement about the adoption of the new policy portfolio.  

“The new policy portfolio meets the GPIF’s return target – a real investment return of 1.7% – with the lowest risk,” it added.

Ueda’s experience at Goldman since 1991 – including as co-head of fixed income, currencies and commodities for Japan – looks very relevant to the task of overseeing this portfolio transition. He left the bank in February last year and became an advisory director, at which point Hong Kong-based James Paradise, his former co-head of Asia-Pacific securities, became sole head of the division.

GPIF has increasingly moved into foreign and new asset classes in recent years, including emerging markets, illiquid strategies such as real estate, private equity and infrastructure.

Such diversification will be much-needed, given the challenges that the fund – like other global investors – will face in the coming months and years. The coronavirus-fuelled market volatility is expected to continue for some months yet and seems likely to be followed by more years of a low-yield environment.

Against this backdrop GPIF is likely to build up its internal investment capabilities, including in areas such as hedge funds and private equity, one Japanese investment executive at a global fund house told AsianInvestor.

Meanwhile, several industry observers also expect Ueda to retain the fund's strong stance on ESG investing.

“I think we can expect GPIF to continue to lead discussions on ESG and stewardship without reversing course,” said the Japanese investment executive.

Hans Poulsen and Richard Morrow contributed to this story.

The article has been updated to show that Ueda left Goldman Sachs in February 2019.

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