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New chief of world’s biggest pension fund facing tough start

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(Bloomberg) — The world’s biggest pension fund named former agricultural banker Norihiro Takahashi as president, bringing in a new manager to take the reins in an election year marked by volatile stock trading.

Takahashi, 58, will replace a retiring Takahiro Mitani. He faces a tough introduction to the job as president of the $1.2 trillion Government Pension Investment Fund. Opposition politicians claim that the fund has invested too much in stocks after doubling its allocation of equities in 2014 with the blessing of Prime Minister Shinzo Abe.

That criticism is only likely to increase in the run-up to elections which are likely this year, after a volatile start to 2016 whipsawed global equity markets and the Nikkei 225 Stock Average had its worst start to a year on record. Japanese stocks have recovered about half their losses after tumbling more than 20 percent through Feb. 12.

“Takahashi is going to have to be very mentally strong,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo. “Even if he gets pressure from above him, I hope he’ll do what’s right for pensioners, not politicians.”

Takahashi, a former managing director at agricultural lender Norinchukin Bank Ltd., will start his new role from April 1, according to a health ministry statement on Tuesday. He is currently president of closely held JA Mitsui Leasing Ltd. Mitani was due to retire a year ago, but he was kept on while the fund looked for a replacement.

While Norinchukin Bank is a relatively aggressive equity investor, it’s unclear if Takahashi will be able to fend off pressure from critics in their demands to reduce stocks and Abe’s call to increase risk assets, and instead focus on the best interests of pensioners, says Shinkin Asset’s Fujiwara.

Norinchukin Investments

Norinchukin Bank is a private financial institution established by Japan Agricultural Cooperatives, Japan Fishery Cooperatives, Japan Forestry Cooperatives and other members of the agriculture, fishery and forestry cooperative system. Of the 2.6 trillion yen ($22.9 billion) in net unrealized gains Norinchukin posted at the end of December, 450 billion yen was from Japanese stocks and 362 billion yen was from local bonds, according to its latest financial statement.

Mitani, 67, joined GPIF in 2010 and is a former official at the Bank of Japan. He oversaw the fund’s move to boost domestic and foreign stock holdings to 25 percent each while reducing domestic bond holdings to 35 percent from 60 percent. The fund posted a 3.6 percent gain in the quarter ended December, rebounding from the worst quarterly loss in data going back to April 2008.

The overseers of the pension manager are due to submit a bill to parliament to establish a committee of directors, including the president, who will be responsible for decision- making and supervising how the pension fund invests its assets. GPIF established a chief investment officer position in 2014, when the fund hired private-equity executive Hiromichi Mizuno.

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