Asset Management Company
We will contribute to activating Japan's financial assets by supporting customers' medium– to long–term asset building by fulfilling the highest level of fiduciary duties.
Medium– to Long–term Company Strategy
Taking into consideration ongoing negative interest rates and population decline marked by falling birthrates and an aging population, the importance of asset building via asset management can only increase in the future.
In this kind of environment, a major issue facing Japan is for public and corporate pensions to achieve stable investment performance and thereby sustain the pension system. Likewise, for individual households it will become even more important to prepare for retirement by engaging in asset building with self–help efforts.
The Asset Management Company works together with Mizuho's banking, trust banking, and securities entities and Asset Management One and cooperates with other in–house companies to serve the needs of a wide range of customers, from individuals to institutional investors (pension funds, financial institutions, corporations, etc.) by providing products and solutions backed by sophisticated investment capabilities. This, in turn, contributes to activating Japan's financial assets.
For our individual customers, we make use of advanced investment know–how cultivated in our pension business to provide investment trust and other products useful for medium– to long–term asset building. In addition, with respect to investment trust sales companies (banks, securities companies, etc.) in direct contact with customers, we make full use of Asset Management One's marketing system, one of Japan's largest, to provide Seminar One and other unique training programs covering not only investment education but also support for human resource development. Through this support for enhancing sales skills at sales companies, we are working to raise understanding of asset–building needs and methods among the individual customers. Through these efforts, we will increase the balance and ratio of investment trusts among asset under management by building up investment trust balances of products and developing flagship funds conducive to medium– to long–term asset building.
For institutional investors, who manage pension funds, in addition to improving the sophistication of their investments, we are accelerating our efforts to provide comprehensive consulting and solutions covering customer needs such as building pension portfolios, ALM analysis, and pension governance support. As a leader in fulfilling fiduciary duties, we are endeavoring to obtain higher evaluations from our customers.
Furthermore, we are continuing with initiatives aimed at integrated management in order to reap greater benefits from the integration of asset management companies into Asset Management One. We will be further developing investment capabilities that serve as an engine of asset management business. Regarding the enhancement of our investment capabilities, we are taking a medium– to long–term perspective as we work to make active use of leadingedge technologies such as AI and big data.
Through the initiatives mentioned above, we will drive the shift from savings to investments/asset building and establish asset management business as the fourth pillar of Mizuho.
- *In October 2016, the new company Asset Management One was established through the integration of DIAM, the asset management function of MHTB, Mizuho Asset Management, and Shinko Asset Management.
Fiscal 2016 Results and Plans for Fiscal 2017 and Beyond
Fiscal 2016 was a challenging year for asset management business, with difficult investment conditions continuing due to low interest rates worldwide. The inflow of funds into public investment trusts reached its lowest level since the global financial crisis of 2008. Nevertheless, we made efforts to offer investment trust products that contribute to the shift from savings to investments/asset building and as a result we were able to achieve our company's Net Business Profit plan. In addition, assets under management increased by JPY1 trillion to JPY53 trillion, compared to the previous fiscal year.
With the launch of Asset Management One in October 2016, we achieved one of our key management goals: integration of our group asset management functions. The size of its assets under management is among the largest in Asia. Our investment capabilities are highly evaluated by customers, and we have the largest balance of assets under management from the world's largest public pension fund (GPIF*).
Since its start, Asset Management One has provided investment trusts that curb downswings exceeding a specified level and that utilize pension fund know–how also employed by the GPIF. It has also held 2,800 seminars and study meetings in total for investment trust sales companies.
Looking ahead, through integrated management, we will bring together asset management expertise developed over many years by the four integrated companies, and provide the best solutions to customers as asset management professionals. We will thereby strive to achieve still greater success as a global asset management company.
We are also making even greater efforts with regard to the defined–benefit (DB) pensions and defined–contribution (DC) pensions that serve as a stable business foundation. For DB pensions, taking advantage as the only trust bank that has outsourced investment operations, MHTB is accelerating the development of a comprehensive pension consulting service which has at its core fiduciary management service that exercises asset management authority and responsibility on behalf of pension funds.
In addition, Mizuho has one of the largest shares of pension subscribers (over 1.1 million) for DC pensions in Japan, a system that has been further developed in recent years and that supports the self–help efforts of individuals as they build assets for their retirement. In conjunction with the recent deregulations for iDeCo, which greatly expanded the pool of eligible people, in November 2016 we released a pension version of the SMART FOLIO automated investment advisory service to help new subscribers with the selection of investment products. We will continue to work to improve convenience for our customers.
By further enhancing the integrated management of Asset Management One and differentiating our pension services, we will continue to focus on operational excellence, thereby contributing to activating Japan's financial assets.
- * Government Pension Investment Fund
1. Current Environment
Economy, Regulations, and Competition
- Demand for a higher level of fiduciary duties
- Deteriorating investment market environment and intensifying global competition
- Increased convenience and greater need for asset management as a result of NISA1 and iDeCo2 regulatory reform
- Greater need for investment sophistication and diversification as a result of the negative interest rate environment
- Downward pressure on trust fees due to the popularity of passive investments and ETFs
- Progress in technology innovation (AI, Robo–advisor, etc.)
- 1.Nippon Individual Savings Account: Small–lot, tax–exempt investment accounts
- 2.Individual–type defined contribution pension plan
- One of the largest outstanding assets under management in Japan and Asia
- Investment expertise cultivated in pension business and product–development expertise honed in investment trust business
- One of the largest investment trust marketing systems in Japan
- Ability to provide comprehensive pension consulting and solutions
- Further strengthening of integrated management in Asset Management One
- Further building up of balance of investment trusts to accommodate increased customer needs
- Development of flagship funds conducive to medium– to long–term asset building
2. Value Creation
Value for Customers
- Individuals： Respond to the ever growing need for steady asset building from medium– to long–term perspectives as more people prepare for retirement
- Institutional investors： Respond to the need for comprehensive pension consulting, portfolio diversification and steady performance, and investment alternatives to Japanese government bonds in the negative interest rate environment
Value for Society
- Support self–help efforts of individual customers' asset building in the medium to long term thereby contributing to activation of Japan's financial assets
- Increase future national wealth and provide companies with growth money, thereby contributing to a virtuous circle for the Japanese economy
3. Business Plans
Risk Appetite Policy
- Allocate resources to investment capabilities, investment trust and pension businesses, viewing asset management business as a growth area contributing to the expansion of Mizuho's non–interest income as well as improved balance sheet control
- Strengthen capabilities to cope with needs for sophisticated investment and medium– to long–term asset building
- Introduce sophisticated investment methods, including use of digital innovations
- Focus efforts on expanding investment trust business and improving pension services
- Taking into account the shift from savings to investments/asset building, allocate more resources to investment trusts
- Accelerate offering of comprehensive pension consulting/solutions
- *FY2016 results recalculated based on FY2017 management account rules
Solutions that Support Sustainable Growth for Our Customers and Society
Fiduciary Management Initiatives
In order to fulfill mandatary and fiduciary duties in pension funds, there is growing needs to entrust investment and other operations to external institutions.
MHTB outsources investment operations to Asset Management One, etc. We thereby maintain a unique advantage in engaging in fiduciary management service.
We analyze and examine our customers' pension portfolio, and give advice on formulating and revising asset allocation plans on a medium– to long–term basis, making good use of MHTB's experience and knowledge as professionals. We also provide support with respect to pension governance and overall pension operations.
As a leader in fulfilling fiduciary duties, we are enhancing our consulting capabilities in order to obtain higher evaluations from our customers.
Expanding Our Service Lineup to Meet Customers' Medium– to Long–term Asset Building Needs
At Asset Management One, we make good use of investment know–how cultivated in pension business, and provide investment trusts that meet the medium– to long–term asset building needs of our customers.
For example, in a balanced fund with exposure to five overseas assets and full foreign exchange hedging, we provide options for curbing downswings exceeding a specified level in order to meet the needs of customers looking for stable investment.
In addition, in a small– and medium–cap stock fund focused on global growth, we provide our individual customers with access to pension investment strategies also employed by the GPIF.
We will continue to contribute to activating Japan's financial assets by providing investment trusts that drive the shift from savings to investments/asset building.