Hedge Funds Japan Pension Funds
Hedge Funds Look to Japan Pensions Following Quake
Global hedge funds are vying for allocations from Japan’s corporate pension fund managers, who oversee about $740 billion and are seeking alternatives to stocks following the March earthquake.
Prosperity Capital Management, the largest manager of Russia-focused funds with about $5 billion in assets, plans to open an office in Tokyo in August. Van Biema Value Partners LLC, a New York-based fund of hedge funds with about $800 million in assets, is targeting Japanese pensions by offering funds that buy securities seen as inexpensive relative to the market.
Japanese pension funds are redoubling their quest to offset the world’s lowest bond yield and a falling birthrate, which have curbed contributions, after the March 11 temblor sent the benchmark Nikkei 225 (NKY) Stock Average to its biggest intraday drop since 1987. Thirty-one percent of 135 retirement funds plan to increase alternative investments such as hedge funds from this fiscal year starting April 1, according to a JPMorgan Asset Management (Japan) Ltd. survey in May.
“After the earthquake, there has been strong emphasis on gaining exposure to investments outside Japan, both for pure diversification reasons and to try to achieve higher returns,” said Michael van Biema, a former Columbia Business School professor and the founder of van Biema Value Partners. “The big problem is that most of the large pensions still have about 60 percent of their money in Japanese government bonds. You just can’t earn a reasonable rate of return doing that.” Source