‘Bigger than BlackRock’ – Sumitomo Mitsui Trust creates Asia’s biggest manager by APAC AUM
The asset management unit of Sumi Trust, the Japanese manager already offering access to strategies via Ucits and segregated accounts, is set to merge with another existing subsidiary of Sumitomo Mitsui Trust Holdings to create a single entity known as Sumitomo Mitsui Trust Asset Management.
The single entity claimed AUM of some $550bn in June 2018, which would see it leapfrog other Asian managers on that basis: measured by AUM sourced from Asia Pacific the new entity would rank above BlackRock, Asset Management One, Nomura Asset Management, Mitsubishi UFJ Trust & Banking, State Street Global Advisors, Tianhong Asset Management, PGIM, Credit Suisse, Amundi Pioneer, Nikko Asset Management and UBS Global Asset Management – according to figures provided by Sumitomo Mitsui Trust Bank.
The merger brings together a business unit that has historically been focused more on the domestic Japanese market, particularly the retail market – Sumitomo Mitsui Trust AM, a 100% subsidiary of Sumitomo Mitsui Trust Holdings – together with the asset management business that currently sits within the Fiduciary Services unit of Sumitomo Mitsui Trust Bank, Limited, itself also a 100% subsidiary of Sumitomo Mitsui Trust Holdings.
The Fiduciary Services unit in Tokyo has offered asset management through its headquarters and also under three subsidiary business units: Sumitomo Mitsui Trust (Hong Kong) Limited – where Asian equity research and investment management is based – Sumitomo Mitsui Trust International Limited, based in London – for international sales and client support – and Sumitomo Mitsui Trust Bank (USA) Limited, that caters to business development and client relations. The asset management business unit of the Fiduciary Services unit alone has some 400 staff, including some 20 Japanese equity research analysts and over 30 portfolio managers.
The global business was started some 15 years ago, and currently has some $20bn equivalent AUM. The business sees considerable growth opportunities, for example, in the DC market in Europe as well as in Japan, explains Yoshio Hishida, managing executive officer, Sumitomo Mitsui Trust Bank, Ltd.
Thus far the offerings targeting Europe have focused on bringing Japanese active products to the region. However, the new entity overall also offers passive approaches.
Earlier in 2018, the asset split of all asset management activities was roughly 26% Japanese equities, 23% global equities, 24% Japanese fixed income, 11% global fixed income, with alternatives and other assets equating to some 16%.
Operating as a single entity will not only facilitate growth globally, but also the ability to bring investment ideas to Japanese investors, notes Hishida.
“They are different brands. The other one is almost totally focused on the Japanese retail market. There is no overlap in the businesses, so it makes sense.”
Hishida also alludes to another reason why such reorganisations might not be limited to his company: there has been an ongoing discussion in the Japanese fund industry as to the merits of splitting manufacturing from distribution, led by discussions around conflicts of interest. Regulatory authorities locally seem to favour separating the two areas to benefit end investors. As one of the largest distributors of mutual funds in Japan the discussion is particular pertinent, Hishida added.
In Europe, the Ucits business has grown to some $600m equivalent AUM, with five Japanese strategies offered, and which have thus far been targeted at investors including private banks and family offices.