Robeco Aims to Double Japan Pension Assets in Managed Futures Hedge Fund

Date: Monday, May 31, 2010
Author: Bloomberg

Robeco Group, the Dutch money manager owned by Rabobank Groep NV, aims to double assets from Japanese pension funds within two years, said Tetsuya Tanaka, senior executive advisor of the firm’s Japan unit.

Robeco Institutional Asset Management B.V. Japan, which opened in Tokyo in 2005, has grown assets from Japanese pensions to 60 billion yen ($657 million) and invested them in a managed futures strategy run by Robeco’s Transtrend Inc. unit, Tanaka said. The strategy, which invests in financial assets ranging from equities to livestock, has returned 7.1 percent this year through April.

Robeco, with about $194 billion in total assets, aims to capture a slice of Japan’s more than 60 trillion yen corporate pension market as funds seek to diversify investments away from traditional asset classes such as bonds and equities. About 37 percent of Japanese pensions surveyed by JPMorgan Chase & Co. said they expect to boost allocations to alternative investments.

“We think this is the time to start tapping into the market,” Tanaka, 42, said in an interview in Tokyo on May 28. “Pension funds are looking for products that have low correlation with market moves as they seek to dissolve their home-biased investments and battle low interest rates.”

To meet rising demand from Japanese clients, Robeco’s Tokyo unit plans to hire one to two client service professionals this year, Tanaka said. The unit has increased its headcount to nine from four since 2006, he said.

Managed Futures

Japanese pension plan returns have been weighed by two decades of slumping markets, an aging population, and a dependence on packages immune to investment performance.

Robeco’s Tokyo office has teamed up with Nomura Asset Management Co. and Sumitomo Trust & Banking Co. to offer funds to its Japanese clients. Among the strategies offered is a computer-driven trading model known as managed futures to benefit from market trends.

The model, with about $8.1 billion in assets, uses market trends rather than fundamentals to invest in about 380 different securities that include equities, currencies, bonds, commodities, livestock and energy.

An index tracking managed futures funds has never had a down year since Eurekahedge Pte began publishing data in 2000. The index has gained an average 0.9 percent through April this year, according to data by the Singapore-based research firm. A Eurekahedge index tracking Japan-focused managers has gained 7.2 percent through April.

“Managed futures have the benefit of excluding any sort of emotional element in investing and simply following market trends,” Tanaka said. “That could entice the appetite of investors.”

Hedge funds are mostly private pools of capital whose managers participate substantially in the profits from their speculation on whether the price of assets will rise or fall.