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INTERVIEW-Japan's top asset manager plans scrutiny on firms in passive funds
October 2, 2016 / 3:01 PM / a year ago

INTERVIEW-Japan's top asset manager plans scrutiny on firms in passive funds

TOKYO, Oct 3 (Reuters) - Japan’s largest money manager Asset Management One Co plans to start scrutinising up to 900 companies in its index funds, as asset managers face growing calls by corporate governance advocates to be proactive with their passive investments.

Yasumasa Nishi, president of Asset Management One, which manages 52 trillion yen ($517.3 billion) in assets, said the company has set up a team to start engaging in dialogue with 700-900 companies in its passively managed funds.

Unlike active investors who pick companies to invest in, passive investors track stock indexes such as TOPIX. Their clout has grown globally in recent years as they have collected hundreds of billions of dollars from investors and can influence voting on proposals at companies.

Both active and passive investors globally are under pressure to keep more watchful eyes on companies they invest in. In Japan, the Government Pension Investment Fund (GPIF), the world’s largest pension fund managing $1.3 trillion, has called on its outside money managers to fully exercise their stewardship duties even for passive investment. Asset Management One is among the firms managing money on behalf of the GPIF.

The moves come amid a broader push by the government of Prime Minister Shinzo Abe to improve corporate governance as he has made rejuvenating Japan’s stock market among the main thrust of his economic growth policies.

Nishi told Reuters in an interview that the company, one of the first Japanese asset managers to undertake this type of scrutiny, has appointed a team of seven staffers to engage with companies that its actively and passively managed funds are invested in.

This team, drawing on the support of about 20 analysts, will check companies’ business activities and make suggestions to management, he said.

“As values of Japanese stocks have not been rising as much as they should, we hope to contribute to the market through engagement activities,” Nishi said.

Asset Management One is a joint venture of Mizuho Financial Group and Dai-ichi Life Holdings. Formerly DIAM Co, it started as a new company this month after combining Mizuho’s other asset management operations. ($1 = 100.6100 yen) (Reporting by Taiga Uranaka; Editing by Muralikumar Anantharaman)

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