Japan’s Asset Management Vision

In a strategic move to reshape its financial landscape, the Japanese government has unveiled an ambitious vision to elevate its asset management industry into a cornerstone of the country’s financial system. By encouraging households to shift their cash savings into investments, the Government of Japan intends to boost corporate valuations, enabling increased returns, which can then lead to further investment and consumption – “a virtuous cycle”.

This promising regulatory tailwind could be a significant opportunity for a transformed Japanese asset management sector to materially grow assets under management. Japanese household savings are estimated to be a staggering $14 trillion, of which over 50% is currently held in cash. At the same time, Japan’s asset management industry is expected to play a critical role in preserving the financial wellbeing of its rapidly ageing population. Notably, Japan’s Financial Services Agency (FSA) has reported that the average elderly couple will experience a ¥20-million shortfall to fund a 30-year retirement, and there are concerns that the state will not be able to bridge this gap. With significant uninvested cash and facing a multitude of disconcerting economic trends, Japan seeks to position itself as a new asset management hub. As policy reforms are implemented across the Japanese financial system, we watch on with interest.

In this whitepaper, we discuss Japan’s view for a transformed asset management sector, the economic backdrop and demographics driving the need for these changes, and the resulting opportunities for asset managers in the Japanese market.