13 Questions for Sparx's Yu Shimizu

In this series, we ask leading fund managers about everything from their investment strategy, to role models, their views on crypto, and what they’d never invest in

Marina Gerner 4 May, 2022 | 9:21AM
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In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.

This time our interviewee is Yu Shimizu, lead portfolio manager of the Japan Sustainable Equity Fund at SPARX Asset Management in Tokyo. The fund has a Morningstar Quantitative Rating (MQR) of Bronze.

Which Sector Shows The Biggest Promise in 2022?

One of the current opportunity sets I am focusing on is the hydrogen-energy value chain. Hydrogen technology is being developed as a storage system for energy stability. There are many companies in Japan that have related technologies. For example, Toyota Motor Corporation has been selling hydrogen-powered fuel cell cars since 2014, and last year, it successfully completed a race with a hydrogen-powered car.

What's The Biggest Economic Risk Today?

I am concerned that rising prices may lead to social unrest. Since supply constraints due to environmental concerns are behind some of the rise in resource prices, the situation will become more serious if we have to choose between the environment and people's lives. I think we should look for balanced solutions.

Describe Your Investment Strategy

I invest in companies that create economic value as a result of generating stakeholder value. We invest not only in leaders who excel in this, but also in improvers and support them through our coaching-type engagement. In this way, I can access a wide range of investment opportunities and contribute to improving their fundamentals.

Which Famous Investor or Professional Do You Admire?

I have a lot of esteem for the management of my portfolio companies. For example, the words of Mr. Yoshida of Sony Group, Mr. Yanai of Fast Retailing, and Mr. Aoi of Marui Group inspire me to analyze companies, make investment decisions, and come up with ideas for organizational management

Name Your Favourite "Forever Stock"

My favourite companies are those that make people happy. I especially like companies that provide products that enrich people's spirit while harmonising with the environment and society, such as Sony Group, Yamaha (musical instruments), Wacom, and so on. However, companies do change so I hesitate choosing forever stocks

What Would You Never Invest In? 

I would never invest in a company that I think would not bring happiness to the world through expansion. For example, companies involved in tobacco or gambling. Again, companies can and do change, so if Japan Tobacco succeeds in its transformation and becomes a food company, for example, it could become an interesting investment opportunity.

Growth or Value?

I don't like the growth or value categories. As I invest in improving companies, these are usually classified as “value” at the time of my investment, but as it improves, it becomes a growth stock so these categories may be misleading.

House or Pension?

If the question is whether I choose real estate or stocks, I would always choose to invest in stocks. Companies have the potential to grow their business activities, and if you choose a good company, you can get involved in solving the world's problems through investment.

What Are Your Thoughts on Crypto?

I'm not an expert and have never bought into it, so I don't know much about it. The fact that it consumes a lot of electricity seems to be negative in terms of impact.

What Can be Done to Increase Diversity in Fund Management?

It is essential for the industry to be a place that accepts diverse values. If we focus only on returns, we will end up with only money-oriented people. I think it is a good trend that sustainable investment has become popular as this can attract individuals that are interested in investing for a variety of reasons.

Have You Ever Engaged With a Company and Been Particularly Proud (or Disappointed) in the Outcome?

A good example is my engagement with ITOCHU Corporation to withdraw from the coal business, that resulted in its complete withdrawal. I am also proud of the fact that more than 80% of the respondents to the questionnaire we send after meetings with companies say that they gain insight from our engagement.

What's The Best Bit of Advice You’ve Ever Been Given?

Peter Drucker said in his book that you have to focus on your contribution to deliver results. I remember reading this in 2008, shortly before the financial crisis. It inspired me to think seriously about what I could do for the world.

What Would You Be if You Weren’t a Fund Manager?

I think I would have been involved in investment education. About 10 years ago, I started an investment education project with a friend and we worked on it for about 3 years, but I couldn't continue because I was too busy with my portfolio management work. If I could, I would like to develop an investment education program that incorporates coaching methods to support the lives of the younger generation.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Marina Gerner  is a freelance journalist