“10 trillion yen” university fund launches Can we save the decline of Japanese universities? August 5, 16:33

It

was four years ago that a post on Twitter by a university lecturer who said,

"I can't buy a ballpoint pen because of research expenses"

was a big hit.

However, the presence of Japanese universities has been steadily declining amid international competition since then.

To overcome this situation, the government will establish a "university fund" with a scale of 10 trillion yen.

The aim is to use the operating profit to raise funds for the development of research infrastructure.

For this reason, it has set a high investment target of "more than 4% per year", but on the other hand, if it fails, there is a risk that public funds will be lost.

Is there a profit?

I asked the person in charge of operations.

(Reporter, Ministry of Economic Affairs, Yutaro Miyamoto)

Ph.D. decrease, dissertation share also decrease

The environment surrounding Japanese universities is harsh.

The "science and technology budget," which includes university operating grants, has been almost flat for nearly 20 years.

Not only the United States, which has increased by about 1.3 times, but also China, which has increased by more than eight times, has been greatly drained.

It has been overtaken by Germany and is being caught up by South Korea.

It is often pointed out that the stagnation of the budget scale has led to the decline of research capabilities.

Looking at one of the indicators of research ability, "share of the number of cited papers," Japan has continued to decline since the beginning of the 2000s, while China has risen at a remarkable pace.

Looking at the number of doctoral degree holders who are responsible for research and development, Japan is gradually declining.

This is in contrast to the large increase in the United States and China, as well as the increase in the United Kingdom, Germany, and South Korea.

It has been pointed out that the peculiar situation in Japan is due to the "postdoctoral problem" in which a doctoral degree holder cannot find a job and the high tuition fees for the doctoral course, which is often exempted overseas.

Government-led 10 trillion yen fund

The government, which had a sense of crisis, noticed the "university fund."

In the United States, prestigious universities such as Harvard, Yale, and Stamford have funds for managing trillions of yen, and the investment profits are used to improve R & D expenses and the treatment of researchers.

Harvard University had an operating profit of 200 billion yen in 2018, accounting for 35% of the university's total revenue.

In Japan as well, some national and private universities, including the University of Tokyo, have begun to operate funds, but the scale is small, ranging from billions to tens of billions of yen.

For this reason, the government decided to establish a fund in order to invest funds with public funds and preferentially allocate funds to universities that are making advanced efforts.

The source is last year's supplementary budget and FILP procured from government bonds.

The operating funds will start at 4.5 trillion yen, but will be expanded to 10 trillion yen in the near future.

It will be a "university fund of an unprecedented scale in the world" (government official).

Mr. Masakazu Kida was appointed as the operation manager.

Mr. Kida is a former managing director of the Norinchukin Bank, which manages assets of 62 trillion yen in the market, and has managed a wide range of stocks and bonds.

Expectations and pressure are placed on the shoulders of funds that are funded by public funds.

We asked Mr. Kida what kind of strategy he would take.

Operational target is "more than 4%"

In late July, the government set a fund management target of "4.38%."

It allocates 300 billion yen (3%) annually to the university side and adds up the long-term inflation rate (1.38%).

This is higher than 4.0% set by GPIF (Government Pension Investment Fund), a government fund that manages pension reserves.

Therefore, the allocation of assets managed by university funds was allowed to raise the proportion of stocks with large price fluctuations to 65%.

Q: Is "4.38%" a high target?

A: I don't think the level of return itself is overly ambitious within the permissible amount of risk.

However, as the trend is that the global growth rate is declining and interest rates are unlikely to rise, we are prepared to make it harder to generate returns than before.

The keyword is "changing the portfolio (combination of assets under management) according to the situation".

We do not take excessive risks, but if we are too careful, we will not be able to achieve our operational goals.

Risk management in the adjustment phase is the most important, but we will do it without rushing.

It may be conservative at the beginning, but on the other hand, it will actively incorporate alternative investments such as PE (unlisted stocks) and real estate (management other than listed stocks and bonds).

We would like to gather core members who have strengths in each asset management as soon as possible, and make an eye on the investment team by the end of the year.

Q: When will the investment profit be returned to the university?

A: One of the prospect is that 5 years.

The biggest risk (concern) of this fund is the inability to allocate investment profits to the university side.

Also, once the allocation has begun, it is unlikely that it will not have to be released next year.

My mission is how to put it on a track that can be distributed stably.

Q: There is also a risk that profits will be negative.

How to deal with it?

A: Bonds: Stocks = 35:65 We will flexibly change the asset composition within the set risk limit.

Since it is necessary to confront fluctuations in valuation gains and losses (of assets under management), we are strongly conscious of accumulating profits, focusing on receivables and corporate bonds with fixed yields and stocks that are expected to pay dividends. do.

In addition, externally, it is all about fulfilling accountability by disclosing with grounds that we made such an investment because of this situation.

Q: Overseas, the university itself is the main body of fund management.

What is the significance of sovereign wealth funds taking the lead in Japan?

A: The fund itself does not play a leading role, but the main business of research and development in Japan as a whole, management is the engine that subsidizes it.

First of all, the goal is to raise returns without considering other things, but hopefully, we would like to become a model for each university to manage its own funds by improving investment, creating theoretical know-how and systems.

The "university fund" will start operation within this year.

The total amount of operating expenses subsidy that the government distributes to universities every year is about 1 trillion yen.

It is expected that if the amount of money equivalent to 30% can be stably allocated every year as planned, it will lead to improvement of the research environment of the university and the treatment of researchers.

On the other hand, if a large loss is incurred in operation, the measures to increase the competitiveness of the university will also be lost.

A huge fund will embark on a heavy mission.

Reporter of the Ministry of Economic Affairs

Yutaro Miyamoto

Joined the

Bureau in 2010 After working at the Sapporo Bureau, the Ministry of Economic Affairs is currently in charge of the financial industry.