CEO's Message & Our Management Philosophy

Taking our Place on the Global Stage as an Active Asset Manager

This year, the Nikkei 225 reached an all-time high, surpassing 40,000 and beating the record set 34 years ago. For those in the asset management industry, especially those involved in Japanese equities, this was the big news they had been long anticipating.

One of the reasons for the bull market is the advent of the new NISA (the tax-exemption program for retail investors in Japan). The new NISA was launched at the beginning of this year as the centerpiece of the government's "Asset Income Doubling Plan", and accelerated an unprecedented shift in Japanese household assets from savings to investment. However, I believe that the biggest factor is the Japanese stock market's efforts to improve corporate fundamentals and governance.

One such driver was the call from the Tokyo Stock Exchange for listed companies with price-to-book ratios below 1.0 times to disclose and implement remedial measures to improve their capital efficiency. As the capital market is borderless, the actions of listed companies to increase their corporate value is highly appreciated by investors around the world, and this has encouraged investment in Japanese stocks. I believe corporate efforts have substantively improved business performance, leading to the Nikkei 225's record high. Various other measures implemented by the government's program for corporate governance reform have also been well received by investors.

In addition, in response to companies taking steps to substantially increase their salary bases, the Bank of Japan decided to lift its negative interest rate policy. The plan to unload the BOJ's large holdings of JGBs and ETFs will also be appreciated by global investors.

In parallel with these corporate governance reforms, there has also been significant progress in discussions over the resilience of the entire investment chain. In response to the government's policy to promote Japan as an "Asset Management Nation," the Financial Services Agency announced their plan for its realization on December 13, 2023. The plan encompasses the "Asset Income Doubling Plan" and the corporate governance reform program mentioned above, and is aimed at increasing Japan's economic growth and national income from assets. There is no quick fix for economic revitalization. I believe that this is a grounded and realistic plan that appeals to fundamentals and has a core objective of achieving economic growth through the market, even if it is not an easy path.

In order to bring our active management of Japanese equities to as many investors as possible, we entered the U.S. active ETF market in April 2024, providing investment advisory services to an actively managed Japan equity ETF in collaboration with a U.S. investment manager. Our motto is: "Be Active. A single step can change the future." With this mindset, as an active asset management company, Sumitomo Mitsui DS Asset Management will proudly take on the challenge of meeting the needs of investors worldwide.

June 2024