AsianInvestor's Top 20 pension executives in Asia list showcases an array of senior executives, from CEOs and CIOs to heads of responsible investing and equity chiefs -- change-makers who are leading the industry with their forward thinking and innovative practices.
As Asia faces a growing silver tide, it's imperative that the pensions industry takes steps to modernise and improve its operations to cater to increasing retirement demands. That will require skilled and talented professionals.
You can find more about the rationale for our Top 20 list here.
Today, we showcase two senior investment executives from Japan and Korea.
CIO, Pension Fund of Japanese Corporations
For most pension fund executives, parking a majority of total assets under management in alternatives would be unthinkable, given how illiquid some alternatives can be.
Yoshisuke Kiguchi, chief investment officer for Pension Fund of Japanese Corporations, however, plays by different rules.
For this CIO, placing 90% of total assets of the pension fund -- which manages several corporate pension plans -- in alternatives seems like par for the course.
Among the mandates of this pension fund, Kiguchi has managed two since 2009 -- those of Okayama Metal & Machinery Pension Fund and West Japan Metal & Machinery Pension Fund.
To ensure the high level of alternative investments did not pose liquidity challenges for fund members’ benefits and withdrawals, Kiguchi focuses on both diversification and cashflow-generating investments in the portfolio mix.
Another interesting fact: about 90% of total assets are also invested in overseas markets.
Kiguchi, who has a robotics degree, started managing investments at the pension fund after an 11-year career at investment and consultancy firm Russell Investments.
Since taking the reins at Okayama Metal & Machinery Pension Fund and West Japan Metal & Machinery Pension Fund, these funds have posted an annualised return of 7.48% on average.
That performance did not go unnoticed among industry peers and investment professionals.
Even as the COVID-19 pandemic made travel in and out of Japan challenging, Kiguchi embarked on a domestic roadshow to explain his investment strategy to other corporate pension funds.
That roadshow led to requests for Kiguchi to include four additional corporate pension fund mandates under the pension fund's management.
The entity also took on mandates from two endowment funds and a financial institution, totalling assets under managemnent of $1 billion.
Alternative investments of this pension fund include fund-of-funds vehicles, private equity, private debt and hedge funds.
Even with the pandemic ending, Kiguchi continues his roadshows with Japanese asset owners.
Despite a packed schedule, he -- and his right-hand man, investment director Shigeru Tamaki -- also find time to meet consultants and funds managers as well as attend investment conferences to gather information and inspiration for new strategies and asset themes.
Kiguchi is also a member of the Alternative Investment Management Association’s (AIMA) global investor board.
He sits alongside asset owners with much larger assets under management and investment teams -- a nod to Kiguchi's capabilities in alternative investments.
Chief investment officer, Public Officials Benefit Association (POBA)
While 2022 was a challenging year for most asset owners globally, it was filled with even more challenges for Korea’s Public Officials Benefit Association (POBA).
Amid turmoil in global financial markets, the pension fund also faced its own problems that required swift action and adjustments that were executed Huh Jang, chief investment officer at POBA.
It was a trial by fire for Huh, who joined the fund in February 2022.
A depreciating Korean won, unexpectedly high loans withdrawn by fund members and capital calls from commitments made to overseas alternatives fund vehicles created a perfect storm.
POBA, nevertheless, managed to deliver a positive return of 3.8% in 2022, when several other pension funds' performance dipped into the red.
The Korean pension fund also won an AsianInvestor Institutional Excellence in 2022 for best regional asset owner.
POBA, like many Korean asset owners, also leans heavily in favour of alternatives: this asset class accounted for close to 78% of total assets at the end of 2022.
This fairly high allocation to illiquid assets means the probability of liquidity issues cropping up is high.
Huh, who previously led investments at DB Insurance, saw the changing financial conditions in 2022 and decided on managing new commitments conservatively.
The fund started to utilise separately managed accounts with asset managers, especially for alternatives investments, where possible.
POBA also turned more sophisticated with its currency hedging. Due to the fluctuating exchange rate between the Korean won and US dollar and subsequent increase in hedging costs, POBA changed hedging policy and directed the team to unhedge overseas equity positions completely from 50%.
To reduce volatility, POBA downsized marketable asset exposures such as public equities from 11% to 6-7% of total assets in the first half of 2022 -- a steep reduction in a relatively short time span.
POBA also exited from some private/alternative assets.
Huh also decided to increase income-generating assets like bonds and loans as well as dividend yielding assets such as isted real estate investment trusts and infrastructure. The aim was clear: to achieve stable cashflows from POBA’s assets.
“We don’t have to depend on marketable assets, such as highly volatile assets like listed equity," Huh told AsianInvestor in May.
The fund also considers environmental, social and governance factors in its investment decision-making. It uses an ESG checklist when picking external managers and investment partners.
Even when it invests in alternative investments, such as infrastructure, it prefers to invest in renewables.