An Ex-Goldman Bond Trader’s Quiet Rise to Managing $1.6 Trillion

Before he landed the top investing job at the world’s biggest pension fund this month, Eiji Ueda spent nearly three decades at Goldman Sachs Group Inc. avoiding the public eye.

Now the 52-year-old former bond trader is stepping into one of the biggest spotlights in global finance. As chief investment officer of Japan’s Government Pension Investment Fund, he’ll be responsible for $1.6 trillion of retirement assets at a time of extreme market volatility and rising public angst about the future.

Interviews with people who know Ueda paint a picture of a steady hand, steeped in knowledge of the bond market, who has both international experience and the capacity to manage a conservative Japanese organization.

While his predecessor Hiromichi Mizuno oversaw GPIF’s biggest-ever strategic overhaul and was at times outspoken, Ueda is seen as more likely to take a methodical approach.

“Mizuno created a completely new GPIF, and fought many political battles to upgrade it,” said Jesper Koll, a longtime observer of Japanese markets who has known Ueda for almost two decades. “Where Mizuno was ‘kaikaku,’ real reform, Ueda is the undisputed master of ‘kaizen,’ seemingly small but relentless and highly effective improvements.”

Ueda, who GPIF declined to make available for an interview, kept a low profile during his time at Goldman, with just a handful of mentions in the press. He began his almost 28-year career at the bank in 1991, just as Japan’s bubble economy was bursting. The University of Tokyo graduate started out working in government bond trading in the Japanese capital, before doing a stint at the Treasuries desk in New York.

Regional Co-Head

He steadily climbed the ranks, becoming a managing director in 2000 and a partner in 2002. In 2012, he was appointed co-head of Asia Pacific Securities, a position he held until he left the bank.

One of Ueda’s early bosses at Goldman was Oki Matsumoto, the founder of Japanese online brokerage Monex Group Inc. He recalled how, as a young trader, Ueda adapted to the high-pressure world of the brokerage’s Treasuries desk in New York.

“He was sent to New York when he didn’t even speak English that well, to the heart of Goldman’s trading floor,” Matsumoto said in an interview. “But he didn’t run away. He took it on and accomplished it and earned respect along the way.”

Matsumoto also said Ueda knows his limitations and has the personality traits to manage a team. “He doesn’t just push people to do things his way, but listens carefully to others,” he said.

Peers also point to Ueda’s background in bonds, which made up about 44% of GPIF’s assets at the end of December. Ueda is a respected insider in the world of Japanese government debt, according to Koll.

At the same time, Ueda brings experience of foreign debt markets at a time when GPIF is boosting its holdings. In March, the fund said it would increase its target allocation for overseas bonds by 10 percentage points to 25%, while cutting its weighting of Japanese debt as much of it trades with negative yields. For Travis Lundy, an analyst who publishes at SmartKarma, Ueda’s expertise will be thinking about risk and liquidity as the fund reshapes its bond portfolio.

Still, Ueda’s skillset may be a bit narrow for managing GPIF’s investments across all asset classes, according to Monex’s Matsumoto. His background in trading is “a different world compared to pension fund management,” he said. But what Ueda lacks in experience, he makes up for in willingness to listen to others, he said.

One area where Ueda will have to adapt is equities, which make up more than half the fund’s assets after GPIF revamped its portfolio in 2014, boosting stocks and cutting bonds. While most experts agreed the fund needed to make riskier investments to pay for people’s retirements, the public criticism in Japan when shares fall has been harsh. An index of global stocks plunged 22% in the first quarter of 2020 as the coronavirus hit.

Risk Management

“It feels like they’ve picked a person who’s very thorough about risk management to lead the fund,” saidHiroyuki Kubota, a financial analyst who runs ablog about the JGB market. They chose someone who is able to live through big market downturns, he said.

Investors will also be watching whether Ueda takes a different approach from his predecessor, Mizuno, who oversaw the fund’s expansion into equities and was a proponent of environmental, social and governance investing. Mizuno made international headlines by blasting short sellers for “short-termism” in an interview with the Financial Times last year. In December, GPIF announced it would stop lending overseas stocks.

But there is disagreement on what that approach should be, and little room to veer too far from GPIF’s prescribed direction. Kubota, the bonds commentator, says the fund should cut back on stocks because losses on them are unacceptable. “Maybe he will lead GPIF in a new direction, instead of absorbing the tactics of his predecessor,” he said. “I’d like to pin my hopes on that.”

Lundy, on the other hand, says the fund is probably underweight equities after the March sell-off and should buy more shares.

What direction Ueda will take remains to be seen, but the people who know him expect he’ll steer a steadfast course.

“From here, GPIF needs a steady hand,” said Koll. “And that’s exactly what Ueda brings to the table.”

— With assistance by Taiga Uranaka, Takako Taniguchi, and Chikafumi Hodo

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