Japan’s public pension fund to adopt performance-based fees
The biggest public pension fund in the world will change the way it pays fees to investment managers in fiscal 2018, with an eye toward creating an incentive for them to boost returns.
Japan’s Government Pension Investment Fund, or GPIF, currently pays fees based on the amount of assets overseen by each managing firm — applying a predetermined percentage rate to the value of assets under management. Actively managed funds, in which investment managers pick and choose assets to achieve maximum returns, are paid better than passively managed funds, which aim to track the performance of an index, such as the Tokyo Stock Price Index, or TOPIX.
The change applies only to actively managed funds that invest in any mix of stocks and bonds, whether Japanese or foreign.
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