Japan’s $ 90 billion university fund struggles to attract talent despite its size
Japan’s largest university fund in the world with a capital of $ 90 billion can only hire a single fund manager in just a few months to get started, despite the explicit backing of new Prime Minister Fumio Kishida. It is done.
Established in a Desperate Attempt to Conduct Scientific Research in Globally Competitive Japan The fund was not attracted to investment management talent, investment director Masakazu Kita revealed. So far the only fund expert has signed up.
In an interview with the Financial Times, North acknowledged that the fund’s biggest challenge is attracting the best investment professionals, given that its compensation levels are well below international standards.
“It is true that we are trying to attract talent, but I am the only one hired so far,” said Kita, former fund manager at Norinchukin Bank in Japan.
“For hiring, I would like to set the compensation at a competitive level to a certain extent. [the prospective candidate] You will agree with the purpose of this fund, ”added Mr. Kita.
Announced in March, the fund sets itself apart from the traditional Japanese approach to financing innovation. At the start of the investment from March next year, 45 trillion yen ($ 40 billion) of domestic funds will be invested, and it is expected to increase to 100,000 billion yen in the “near future” in due to university funding and additional public debt.
The fund is required to provide a payment rate of 3% per annum, which supports a wide range of scientific research focused on work currently constrained by conservative academic institutions. The idea behind this donation is to convince young Japanese scientists that they can carry out pioneering projects with a new risk-averse funding system.
However, concerns remain as to whether the funds themselves are being managed too conservatively to generate something close to the kind of return produced by similar much smaller funds. For example, Harvard University’s $ 42 billion donation fund has generated an average of 11% annual revenue since its inception.
With 65% of the investment going to Japanese and foreign stocks and 35% to global fixed income, the portfolio is expected to include alternative assets such as private equity and real estate.
Earlier this month, the fund, managed by the Japan Science and Technology Agency (JST) of the Ministry of Education, Culture, Sports, Science and Technology, named five members of the investment committee, including former Bank of Japan vice-chairman Hiroshi Nakaso and Landis Zimmerman. Director of Investments, Howard Hughes Medical Institute.
According to government officials, the base salary of the fund’s investment professionals is that of the Japanese government pension investment fund, the world’s largest pension fund, with the investment manager managing $ 1.7 trillion. and earning about $ 270,000 per year. It is said to be comparable to the standard.
GPIF fund managers may make more money than CIOs, but that level is still far below global standards, with the Harvard fund’s chief investment officer making around $ 5 million.
“It’s very difficult, especially in Japan. JST is a public institution and the salaries are not very flexible, but if you want to hire very talented people from the financial industry, you need to set a competitive salary. “Sho Ito, deputy director of the Cabinet Office Science Bureau, said. , Technology and innovation.
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