Japan’s GPIF Creates Alts Database as It Expands Exposure to Asset Class

Japan’s Government Pension Investment Fund is creating an alternative assets database to sort through the vast and growing amounts of data and research it needs to continue pumping funds into the asset class. The 278-trillion-yen ($1.8-trillion) pension giant’s alts holdings have grown at a prodigious rate, reaching $27.3 billion as of the end of fiscal 2024 from $1.3 million one decade earlier, and still have room to grow, according to the fund. [

The GPIF stated that because of its growing alts allocation, it needs to regularly and efficiently analyze detailed performance data for potential future alts investments. It also notes that with a 5% cap on its alts holdings, its current allocation of 1.6% has “significant room for further investment.”

BNY Mellon’s Eagle Investment Systems has been hired to collect the data that will be used. According to GPIF officials, the fund will collaborate with the firm and begin acquiring the data in conjunction with the asset managers for each of its alternative funds.

As of the end of March, approximately $13.5 billion of the $27.3 billion in GPIF’s alts investments was invested in infrastructure assets, with approximately $8.2 billion and $5.6 billion in real estate and private equity, respectively.

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The public pension fund also has a total of approximately $48 billion worth of alternative investment commitments as of March 31, approximately $21.1 billion of which is in infrastructure, with about $16.6 billion and $10.3 billion commitments to real estate and private equity, respectively. The commitments represent the total of the amounts initially agreed on as the maximum amount of capital GPIF will contribute to each asset manager.

“Investments in alternative assets are not managed as an independent asset class but within the framework of traditional asset classes,” the GPIF wrote in a summary of its investment status and challenges published this month. “Therefore, it is essential to address operational management challenges such as measuring returns relative to traditional assets and managing risks.”

The GPIF stated that evaluating and selecting funds relies heavily on qualitative assessments, while quantitative evaluations are limited in terms of metrics, such as internal rate of return or investment multiples. The pension fund therefore decided to create a database that will accumulate the data needed for advanced quantitative analysis and “increase the confidence” in earning excess returns.

“Unlike traditional assets, such [a] database is not common in the alternative investment market,” the GPIF stated. “Therefore, GPIF will need to directly collect data from individual fund managers.”

The pension fund also reported fiscal second quarter returns of 5.5%, bringing its first-half return to 9.8% and raising its total asset value to 278 trillion yen. Domestic and foreign equities were the top-performing asset classes, with quarterly returns of 11% and 9.8%, respectively, while foreign bonds earned 3% and domestic bonds lost 1.4%.

For the first half of the year, domestic and foreign equities returned 19.3% and 17.9%, respectively, while foreign bonds rose 4.6% and domestic bonds were down 1.6%.