Investment Japan (IJ) presents chats with investment professionals in Japan, who discuss their current thoughts on investing and their backgrounds in asset management. Our 4th interview is with Kosuke Okimori of Kewpie Pension Fund.
Thinking of Investment: Reflecting corporate philosophy in pension management
Since its establishment, Kewpie Corporation has maintained that good products begin with good ingredients. Likewise, in the management of our pension fund, good products begin with good investments and good managing institutions.
For us, a good ingredient is the right asset manager, even more so than the right product. It is much easier to change products than to change managers, after all. I have certain expectations of our asset managers: invest in new products but be willing to shed existing ones; assess total returns from a combination of portfolio products rather than simply assessing individual products; don’t favor your own products.
Initially, our fund’s investment principles derived from boilerplate that was written by a trust bank. We found the language wasn’t reflective of our company, so we rewrote it to better reflect our own values. Besides the above-mentioned corporate philosophy, Kewpie maintains 3 corporate principles, which we reformulated and made part of our fund’s general operation: 1) “Act on moral principles”, meaning asset managers should base their assessments on what is true and right; 2) “Strive for originality and ingenuity”, meaning don’t rest on the status quo, but adapt a flexible management style to achieve targets; and 3) “Look after the parent’s wellbeing”, meaning the fund should repay employees and beneficiaries who have contributed to the Kewpie group. I think articulating these principles helps Kewpie’s employees understand what our fund is about. It means more than simply saying, “Trust our fund management”.
Everywhere in our operations, we strive to bring practice in line with our corporate philosophy. This year, we’ve teamed with a fintech company to develop an analytical tool that will make accounting ledgers and reporting more efficient by dropping all data from asset managers into a single batch. Improving our booking system and asset management platform has been an issue for some time. Currently it is difficult to obtain monthly closings and annual returns instantly. The classification of asset allocation varies depending on where it is submitted. Hopefully, our improvements to these systems will not only help my successors, but other pension funds and asset owners as well.
Next, we plan to formalize our ESG investment policies and SDG goals in writing, extending them to all investments, not just equities. Again, the wording will reflect Kewpie’s long history of environmental concern and engagement.
All of these makeovers were initiated during the first three or so years of my tenure, to untangle things I felt were inefficient or difficult to understand. At the core of each reform was the desire to gain the understanding and trust of employees and beneficiaries. Now after nearly 10 years as a director of Kewpie’s pension fund, I am beginning to look toward passing the reins to the next generation.
Management History: Knowing backgrounds and having different views
I had been involved in agricultural imports ever since I joined Kewpie group. At age 40, I was suddenly transferred to accounting, which I had to learn by studying bookkeeping texts. In 2012, I was appointed an investment director of the corporate pension fund. Once again, I started from scratch, as in: “What does it mean to manage a fund?” I started by examining the portfolio. Common sense might have dictated I tell Kewpie HR they had made a huge mistake, yet all my seemingly irrelevant experience ended up informing the job I do now. For example, the knowledge of weather I acquired from dealing with agricultural products helps me understand insurance investments. My belief that good products derive from good ingredients came from my experience with crop trading. I learned there that a good product cannot result unless you are committed to it at every stage -- from seeds to farming land, harvest, to processing, to delivery and retail. The same idea applies to being an asset manager. Once you start cutting corners or ignoring problems, you will never achieve a satisfactory return.
It’s a common saying in the food industry that “you can judge a company by its toilets”. In practice, I could determine the quality of a crop by noting the condition of the farmland, for instance whether there were puddles or adequate sunlight. At asset management companies, it’s harder to see such signs. Still, you can gather clues from the entrances of office divisions, postings on office walls, or how the desktops are organized.
Throughout my life, I have found myself in new surroundings and being forced to adapt. As the child of a trading company man, I attended primary school from age 6 to 11 in Hamburg, which was then part of West Germany. None of my classmates had ever seen a Japanese before. I returned to Japan, again outside the main, with quite a different background from the other children. This experience made me keen to understand other people’s viewpoints. Now, when I talk with asset managers about investments abroad, for example, I focus on how they view the countries they invest in. I can then picture what they are good at, what they tend to emphasize, and how knowledgeable and enthusiastic they are. As always, I try to assemble the best ingredients to get the best management results for our fund.
Kewpie Pension Fund is a defined benefit fund, serving about 8,000 employees and retirees (fund-type and contract-type combined) of Kewpie Corporation. Fund assets were approximately JPY 65.5 billion as of May 2020, with an expected return of 3%.
Its policy asset mix consists of bonds (domestic and foreign), equities (domestic and foreign), long-term growth assets, insurance-linked securities, insurance general account, and short-term assets. The fund maintains a relatively high ratio of alternative assets at 20%, which we increased from 4% in 2014.
Executive Investment Director
Kewpie Pension Fund
About Kewpie Corporation: https://www.kewpie.com/en/