Mizuno: Pension CIO decisions make marginal difference compared to board asset mix
Hiro Mizuno · Sustainable Investing 10: Hiro Mizuno – Changing the Game (Capital Allocators, EP.148) · Jul 9, 2020 · at 10:56
Hiro Mizuno, former CIO of Japan's $1.5 trillion Government Pension Investment Fund (GPIF), discusses public pension fund governance and portfolio performance drivers with Ted Seides.
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“Well, the point is, most of the big asset owners, let's take public pension fund as an example, GPF, Culpers, Coasters, and all the big public pension funds, their most critical decision In terms of the financial performance of their portfolio performance is not actually decided by executive team or investment team. And then most of the organization that's decided at the more high level governing body, like a trustee board or the investment board or whatsoever, or like in some cases, like a GPIF is actually decided by the ministerial level. Right? So that's what I found out is I call this a sort of inconvenient truth of our structure. But what's most mission critical decision is made by usually no investment professional receiving advice for advice from the investment consulting or something. But what the real investment team is doing By tilting the asset allocation or like deciding passive active mix, also selecting managers. And as some of those like the big pension funds, which has a sort of a better resources, they take some investment in house, but it's those actions or like those decisions made by investment professional, including a CIO is actually make much less difference to the fund's performance for the longterm. So you are right in a way how hard the CIO investment team works, managing the portfolio, trying to adjust to the market conditions. Well, it makes difference, but the compared to the difference made by the very high level policy asset mix decision is very marginal.”
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