Investment consultancy Mercer has rolled out Mercer Investment Solutions (MIS) in Japan, the first Asian market (excluding Australia) where the service is available. Fumihiko Otsuka will be Japan representative director and president of the delegated investment management platform.
MIS will mainly target Japan’s institutions, offering delegated management of asset pools, including implementation of investment strategy and asset allocation, and monitoring/evaluation of fund managers. It has $136 billion in AUM across Australia, Europe and North America, as at June 30, 2015.
A spokeswoman declined to confirm whether any clients had already signed up to use MIS in Japan, Asia’s biggest pensions market.
The firm is planning to launch MIS elsewhere in the region in the coming months, but the spokesoman declined to comment on which markets would be likely candidates.
She cited three reasons for the decision to launch in Japan. The first was client demand, notably from foreign capital pension fund sponsors that already use Mercer’s consulting services in Japan. “They asked whether we could manage their local pension funds in the same sophisticated manner as they do in their [other] global offices,” said the spokeswoman.
Another factor was the market environment, she noted. For the first time in over 20 years Japan is emerging from a deflationary environment, thanks to ‘Abenomics’ monetary and fiscal stimulus. As a result, investors’ portfolios are likely to need major structural changes, especially in a challenging environment of ultra-low yields and relatively expensive equity markets.
The third driver of the Japan rollout is the rising demand in Japan – as elsewhere in the world – for alternative assets. Mercer has been strengthening its alternative investment solutions offering, noted the spokeswoman, citing as an example the acquisition of private asset specialist SCM (Strategic Capital Management).
Mercer Investments now manages $7.4 billion in funds of hedge funds and $12 billion in private assets in manager-of-manager structures.
Otsuka joined in June from US fund house Invesco, where he was Japan head of corporate strategy and development, with responsibility for product development, risk management and investment division planning.