GPIF Working paper：GPIF’s New Performance-Based Fee Structure
2018.06.11
Takashi Jimba1
In GPIF, about 20% of all assets are actively managed by the asset managers, but only a small number of
funds achieve the target excess return rate during the three years from FY2014 to 2016.
In addition to the problem of the selection ability of the GPIF, there is a possibility that the target excess
return rate may not be set properly by the asset managers and they focus on the increase of the asset
under management beyond their capacity. For this reason, we revised the current fixed fee structure and partial performance-based fee structure,
and introduced the following new performance-based fee structure.
① In order to strengthen alignment of interest, the base fee rate is lowered to the rate of passive fund, and
the maximum fee rate is scrapped.
② Introduction of a carryover which partially accumulates payment of annual performance-based fees so
as to link with mid- to long-term investment results.
③ A multi-year contract is concluded to enable to achieve excess return in medium- to long-term goal. GPIF has a high reliance on passive fund as a universal owner. Passive fund is based on an efficient
market, and active fund is indispensable for the market to be efficient. We hope that introducing this new
performance-based fee structure will lead to further evolution of active management institutions
http://www.gpif.go.jp/public/pdf/20180611_new_performance_based_fee_structure_en.pdf