Tokyo, Japan – Corporate pension funds in Japan are facing a professionalization push as executives and CIOs lack the necessary investment experience. In a culture that values generalists over specialists, individuals are often promoted internally within corporations, leading to a gap in investment capabilities.
According to Keiichi Aritomo from FinCity.Tokyo, the lack of investment expertise among corporate pension fund executives is a common issue. He emphasizes the importance of recruiting individuals with the right skill set to effectively manage assets and investments within these funds. Similarly, Konosuke Kita from Russell Investments in Japan highlights the need for talent with specialized investment capabilities, which are typically found in the financial industry.
As Japan aims to become an “Asset Management Nation,” there is a growing focus on reforming asset ownership and improving the capabilities of asset owners, particularly within corporate pension schemes. Aritomo stresses the importance of building capabilities, establishing clear career paths for CIO roles, and enhancing supervision of asset management functions to maximize risk-adjusted returns.
The Ministry of Health, Labour, and Welfare of Japan is expected to increase supervision of corporate pension schemes, with an emphasis on safeguarding custodian functions. While operational risk management is crucial, optimizing risk-adjusted returns is equally important. Aritomo suggests that corporate pension funds should be supervised similarly to asset management companies by the Financial Services Agency.
With most corporate pension schemes managing portfolios valued at under $200 million, there is a call for upgrading capabilities within these funds. Aritomo advocates for the recognition of the institutional investor role within corporations and the importance of talent development in the industry. The government’s new policy plan aims to enhance performance through outsourcing investment capabilities and mid-and-back-office functions for small asset management teams.
Overall, the need for talent with specialized investment expertise is crucial for the success of corporate pension funds in Japan. By emphasizing capability building and strategic partnerships, these funds can enhance their investment performance and drive growth in the country’s financial market.