Japan, and Tokyo more specifically, has previously served as the core of Asia’s hedge fund industry. And, while it still hosts multiple billion-dollar hedge fund managers the city has fallen some way behind Hong Kong and Singapore.
Yet, in recent months the Tokyo government has orchestrated various initiatives to promote the city as an attractive place for managers to operate from. The fledgling, efforts are being rewarded with a few sizeable Tokyo-based start-ups getting up and running.
Hoping that this trend continues is Jiro Shimpo, formerly director of alternative investment consulting for Japan and Northeast Asia at Russell Investments. During his time there he was considered the go-to person for Japanese corporate and institutional allocators looking to invest in Japan-based hedge funds.
Shimpo started his own investment management and consulting firm, Tasku Advisors, back in December. The name cleverly combines the English word task with the Japanese word tasuku which means ‘to help’.
Shimpo is doing his best to help encourage Japan’s corporate pension plans and institutions that hedge funds should be part of their investable universe.
“Investors need to prepare for the downturn and make sure they have enough liquidity available. Besides helping them enjoy more liquidity, hedge funds have a better chance this year of delivering alpha given the current environment,” he says, adding that most corporate pensions in Japan have not increased their exposure to hedge funds in the last two years.
Yet, he does so in a crowded advisory marketplace which features former employers Russell Investments as well as Towers Watson, Mercer, Nomura, Mizuho and Daiwa.
Shimpo says he has found new niches where his company can thrive and grow.
“Historically, big consultants have invested in a large platform of analysts and that soon turned into a major cost centre,” he says. “To pay for those, they moved into co-mingled multi-strategy products but that made them less flexible in addressing the specific needs of a client. There was less room for them to provide customised solutions.
“By going on my own, I hope to provide more customised investing and advisory solutions to institutional investors,” he adds.
And while he advocates the hedge fund space, he says it will prove a little harder for managers this year as markets are at a pivotal point, due to several factors including domestic and international changes in monetary policy.
Japan’s hedge funds also disappointed last year in terms of performance, on average. According to data from AsiaHedge, Japan-equity focused funds registered a median loss of more than 10% for the whole of last year.
There were silver linings, says Shimpo. Among them Ebisu Capital. The Japan equity-focused fund which deploys fundamental analysis and macro overlay to investing, was started by ex-Millennium portfolio manager Takashi Shida last year.
“He is very good at controlling risk which is important during a market downturn,” Shimpo says of Shida.
Shimpo will be hoping that more Japan-focused managers can turn their performance around and become attractive for corporate pensions and institutions again.
Coffee With…Jiro Shimpo on AsiaHedge.