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Japan's public pension fund to adopt performance-based fees

Actively managed funds will be held more accountable for returns

Japan's Government Pension Investment Fund earned a record quarterly return of more than 10 trillion yen in the October-December period, thanks to the global stock market rally.

TOKYO -- The biggest public pension fund in the world will change the way it pays fees to investment managers in fiscal 2018, with an eye toward creating an incentive for them to boost returns.

Japan's Government Pension Investment Fund, or GPIF, currently pays fees based on the amount of assets overseen by each managing firm -- applying a predetermined percentage rate to the value of assets under management. Actively managed funds, in which investment managers pick and choose assets to achieve maximum returns, are paid better than passively managed funds, which aim to track the performance of an index, such as the Tokyo Stock Price Index, or TOPIX.

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