Hamilton Lane to advise Japan’s largest pension

The Pension Fund Association, one of Japan’s oldest and leading institutional investors, recently hired Bala Cynwyd, Penn.-based investment advisor Hamilton Lane to help shape its growing private equity portfolio. Hamilton Lane’s assignment is to work closely with the Japanese pension fund manager to set its allocation targets, conduct due diligence on funds and make recommendations.

Until recently, the PFA has invested almost exclusively in stocks and bonds—most of them Japanese. As of March 2006 the association had allocated 37% of its assets to domestic bonds, 33% to Japanese exchange-listed companies, and 30% to foreign stocks and bonds, according to its website.

It’s unclear what kind of funds Hamilton Lane plans to recommend for the PFA or where they might be located. The PFA manages roughly $110 billion in assets.

Confronted with an aging population and clients hitting retirement age—the Japanese government estimates that one-fourth of its population will be receiving pension benefits in the next 20 years—the PFA has been dipping its toe into new areas to meet the bigger payouts it faces. Last summer, a spokeswoman told a Tokyo newspaper of the association’s burgeoning interest in real estate, which has been booming since 2005 thanks to the nation’s longest economic expansion since World War II.

Hamilton Lane manages some $10 billion in private equity assets, and advises on clients representing another $75 billion. Many of its clients are located outside of the United States, including the Seventh Swedish National Pension Fund. —Constance Loizos