IJ spoke with Keiichi Aritomo, Executive Director of FinCity.Tokyo (FCT), about promoting Tokyo as a financial center. Aritomo says FCT’s management development program has fostered an increase in emerging asset managers. FCT intends to ramp up its promotion efforts.

Investment
Japan (IJ):

We hear the number of boutique asset managers in Japan is increasing. Is that true?

Aritomo:

FinCity.Tokyo (FCT) office is based in Kabutocho near Tokyo Stock Exchange. We are surrounded by an increasing number of boutique and independent asset managers recently launched in Japan or returned from overseas.

We see clusters for emerging asset managers developing in Tokyo, due in part to FCT's program fostering new managers, Tokyo Emerging Managers Program (EMP).

IJ:

Tell us about the Tokyo EMP.

Aritomo:

Tokyo EMP encourages and incentivizes Japanese investors to provide seed capital for emerging managers. Tokyo Metropolitan Government (TMG) subsidizes half of the gatekeeper's fund of funds management fees.

We are also creating business matching opportunities between Japanese investors and emerging asset managers.

 

Nearly half of Asset Owners interviewed have some experience in seeding emerging managers in Japan or overseas.

44%

It is not necessarily very new in Japan. According to our recent survey, 44.4% of pension funds have invested with emerging managers through fund of funds gatekeepers.

We are trying to make seed capital more accessible for emerging managers.

In addition, TMG is subsidizing 50% of middle/ back office operational outsourcing fees for emerging managers. In the past, it was unclear which functions asset managers could outsource.

In conjunction with Financial Services Agency (JFSA), the permissible outsourcing functions are now being clarified. We would like to make it easier for emerging managers to start with small teams.

IJ:

As far as I know, few Japanese institutional investors are aware of the program. What is your take?

Aritomo:

Although Tokyo EMP launched more than a year ago, it is not yet very well recognized among Japanese asset owners. None of the corporate pension funds outside Tokyo seemed to be aware of it.

We need to promote Tokyo EMP within Japan as well overseas.

When we explained EMP to Japanese asset owners, more than 40% expressed interest in the program.

Less than a quarter of Asset Owners interviewed are familiar with Tokyo EMP.

40%くらいが

IJ:

What do the newly established managers say about the Tokyo EMP?

Aritomo:

Feedback from emerging managers on EMP is mixed at this point. While emerging managers appreciate TMG's effort to support incubation, buy-in (even recognition) from Japanese asset owners has been limited. In addition, there are quite a few constraints on the program, as it was initially designed with a large quasi-governmental institution.

We may need to adjust the emerging managers program periodically to make it more practical and appealing.

Aside from EMP, emerging managers find Tokyo's social infrastructure robust and comfortable.

 

What are advantages of Tokyo from business and living perspectives?

advantages

IJ:

Thank you very much.

About FinCity.Tokyo: https://fincity.tokyo/en/

Keiichi Aritomo
Keiichi Aritomo

Executive Director of FinCity.Tokyo

 

Keiichi Aritomo is Executive Director of FinCity.Tokyo. Keiichi is also a co-founder and Board Director of JIAM (the Consortium for Japan International Asset Management Center Promotion). He is also Asia Head of Kensho Technologies, LLC., a leading financial AI solution provider acquired by S&P in 2016. Keiichi was a Partner at McKinsey & Company, PwC and Deloitte, where he specialized in financial services industry and technology strategies across North America, Europe, Southeast Asia and Japan.

He has co-authored several books including “Single View of Customer for Financial Institutions” published from Kinzai and Shanghai Communication University Press both in Japanese and Mandarin.