EMP Roundtable: The Current Status and Potential of EMP in Cultivating the Next Generation of Japanese Asset Managers (Part 1)

Participants:

• Mr. Hiroyuki Nomura, Operating Officer, Senior General Manager, Investment Planning Department, Japan Post Insurance Co., Ltd. (middle right in the picture);

• Ms. Emi Onozuka, Outside Director, Daiwa Asset Management Co., Ltd. (right);

• Mr. Jun Shiota, Senior Managing Director, Deputy Head of Fund Management and Head of Stewardship & ESG, Fund Management Division, Daiwa Asset Management Co., Ltd. (left);

• Mr. Yu Shimizu, Representative Director & CIO, Cadira Capital Management Co., Ltd. (middle left)

Note: This is an English translation of the original Japanese version. In the event of any discrepancy or inconsistency between the Japanese version and its English translation, the Japanese version shall prevail.

Cadira Capital Management Co., Ltd. ("Cadira Capital Management") received the first mandate under the Emerging Managers Program ("EMP") by JAPAN POST INSURANCE Co., Ltd. (hereinafter “Japan Post Insurance”), Daiwa Securities Group Inc. (hereinafter “Daiwa Securities Group”), and Daiwa Asset Management Co., Ltd. (hereinafter “Daiwa Asset Management”), a consolidated subsidiary of Daiwa Securities Group. In light of this, we invited Mr. Nomura from Japan Post Insurance, the owner of this EMP, and Mr. Shiota from Daiwa Asset Management to discuss the program. The discussion was moderated by Ms. Onozuka, Outside Director at Daiwa Asset Management.

Background of the Program Launch

―Ms. Onozuka: To begin, could you explain what the Emerging Managers Program (EMP) is?​

Mr. Nomura: The most significant point is that the Japanese government has set forth a policy aiming to become an "Asset Management Nation." Within this, EMP has been explicitly highlighted. As asset owners managing long-term capital, we are in a position to contribute to this national goal. Therefore, we are committed to supporting this initiative.​

To realize the vision of an Asset Management Nation, the "Asset Owner Principles" are crucial. As fiduciaries entrusted with our clients' assets, we must always act from our clients' perspectives. Revitalizing and expanding Japan's financial markets is also vital for increasing Japanese citizens' financial assets. Establishing a mechanism that creates a virtuous cycle of domestic capital is now more necessary than ever.​

However, institutional investors like us have traditionally allocated capital cautiously, balancing risk and return. There's a persistent wariness towards asset managers without a track record or new markets, leading to a lack of capital flow. Even within Japan, investment in innovative new markets hasn't progressed sufficiently.​

Breaking this trend and directing investments into underfunded areas can invigorate markets and ultimately benefit many people. Emerging Managers (EMs) can serve as a bridge in this process. If we look outside Japan, nurturing EMs has led to the creation of new markets, attracting capital, and generating returns, creating a positive cycle. Japan needs to develop new investment styles distinct from traditional ones. We believe that allocating a portion of our assets to such EMs is essential to contribute to building a new society.​

We approach EMP with a proactive stance, aiming to "grow together." Accordingly, we've established a policy to delegate investment management and allocate up to 300 billion yen to EMs by the end of fiscal 2028.

Mr. Shiota: As asset managers ourselves, supporting other competing asset management firms through this program was a challenging and delicate matter. However, considering the broader national initiative of becoming an Asset Management Nation, we recognized that there are still many unexplored and underfunded areas within our industry. Collaborating with new managers to address these areas holds significant meaning.​

So, how can we contribute? Our company has accumulated expertise in middle and back-office functions and product structuring. Leveraging these strengths to support EMs in delivering capital to new markets is a significant role we can play.​

On the other hand, as asset managers, all the funds we manage are entrusted by our clients; we do not manage proprietary funds. Therefore, we needed to carefully consider whether to create and sell funds ourselves or gather funds in another way. Given our partnership with Japan Post Insurance, we concluded that collaborating with them to operate this program would be the most appropriate and feasible approach. Japan Post Insurance has the capital, and we have the operational capabilities and know-how in management and structuring. Our shared direction led us to participate in this program.

―Ms. Onozuka: I have been involved in the asset management industry for about 25 years and was once in the position of an EM. At that time, I struggled with raising capital and expanding the scale of operations. There were no support programs like EMP, and taking the first step was extremely difficult. How did Cadira Capital Management perceive this EMP program?​

Mr. Shimizu: Our company was established in May 2022, so we're just entering our third year. Initially, the biggest challenge was "where to raise capital." While we believed that steady efforts would eventually be recognized, we also realized the importance of strategically targeting our efforts.​

In this context, the EMP initiative emerged. Honestly, we felt, "This is truly fortunate." Just before EMP officially began, we had an opportunity to exchange views with someone from Daiwa Securities' fund development team. They mentioned that, in addition to like Nippon Individual Savings Account (NISA) which nurtures investors, we need to cultivate people who can "discern value" in the long term. This perspective resonated deeply with us. Shortly after, discussions about EMP progressed rapidly, and by the end of 2023, it was fully underway.​

For EMs like us, participating in EMP was an opportunity we couldn't miss. The market has a significant shortage of EMs, meaning the balance with asset allocators is still off. From a more idealistic standpoint, we also felt the significance of this program. As Mr. Nomura mentioned, it's an initiative that contributes to "industry development." It's not just about growing our own business but about upgrading Japan's entire financial industry.​

Through discussions with Japan Post Insurance, Daiwa Asset Management, and the Financial Services Agency, the significance of EMP became clearer. While there's a business aspect, more importantly, by becoming a "good example," we can create a positive cycle for other EMs to follow. We've been discussing internally how we can fulfill such a role.​

Ms. Onozuka: Thank you. We've had various opportunities to work with Cadira Capital Management in the past, and I believe one of your strengths is the willingness to be a "first penguin." When evaluating EMs, it's crucial to see if they have the determination to take risks. In that sense, your company truly embodies the spirit of a "risk-taker." As an asset management firm, your courage and attitude are commendable.

Operational Structure

―Onozuka: I’d like to ask more about the structure of EMP. How exactly is this initiative being run?

Mr. Shiota: At Daiwa Asset Management, we serve as a “gatekeeper,” leveraging the expertise we’ve cultivated in product planning and fund structuring. Specifically, the program started with a structure where we use capital from Japan Post Insurance to manage funds selected by us. In this case, we considered candidates introduced through the EM Showcase hosted by the Organization of Global Financial City Tokyo (FinCity.Tokyo).* However, that’s not the only source—we also independently conduct due diligence (DD) on other candidates to determine which managers are most suitable for this program and have potential for future growth.

(*The Organization of Global Financial City Tokyo is a public-private organization that promotes Tokyo as a global financial center through various initiatives.)

Going forward, we believe it’s important for other asset owners to broaden their perspectives and actively support the development of EMs. Eventually, we hope that more institutional investors who align with the EMP’s objectives will join, creating a system that attracts new capital beyond what’s provided by Japan Post Insurance. The launch of the fund managed by Cadira Capital Management represents the first example of this effort.

To identify future EMP participants, we will keep our channels open. In addition to using platforms like the EM Showcase, we welcome introductions through other networks. For instance, if the fund managed by Cadira Capital Management performs exceptionally well, it may inspire other EMs to take up the challenge. We also welcome direct approaches from such candidates and will continue conducting DD fairly to select partners.

Ms. Onozuka: Going forward, I hope EMs will actively promote themselves and communicate what kind of investment management they’re doing. The emergence of platforms like the EM Showcase, which allows this kind of visibility, is very meaningful.

―Ms. Onozuka: Cadira Capital Management participated in the EM Showcase organized by FinCity.Tokyo. Could you tell us more specifically what kind of program this is?

Mr. Shimizu: The EM Showcase is part of FinCity.Tokyo’s broader effort to nurture emerging managers. For example, they also host workshops called “Dokuritsu Kaigyo Dojo,” where existing EMs share their experiences with aspiring managers.

From 2024, FinCity.Tokyo took a step further and launched the EM Showcase as a public platform to introduce promising EMs to society. Through their network, they identify and research candidates, selecting a few to highlight. In 2024, 15 firms were selected, including Cadira. In 2025, 23 firms were chosen. I expect this will become an annual event. Rather than applying ourselves, we were actually approached and selected based on FinCity.Tokyo’s research.

Ms. Onozuka: FinCity.Tokyo is involved in a wide range of initiatives. I’ve had the pleasure of joining them several times as a moderator or speaker, and I find their work impressive. What I particularly admire is their active effort to bring in best practices from overseas. This is an area that remains underdeveloped in Japan especially with respect to EMs.

As mentioned earlier as a perspective from asset owners, the current norm in Japan is that without a track record, no investment decision is made. That’s unfortunate. But in places like Canada and the U.S., asset owners tend to invest the bulk of their funds conservatively while allocating a portion to emerging managers, taking risks based on thoughtful DD and future potential. This kind of “supportive spirit” is something foreign institutional investors embody.

FinCity.Tokyo has studied such international examples and turned them into actionable programs in Japan. They truly deserve recognition. More than anything, there is real promise in how these initiatives are now creating tangible outcomes.

 Mr. Nomura: As I mentioned earlier, one of the most significant developments is that the national strategy of becoming an Asset Management Nation now includes a clear mandate to foster EMs. Within this structure, the EM Showcase has been positioned as a practical mechanism. The existence of a national strategy makes it easier for institutional investors to take initiatives. 

If this had been an ad-hoc support initiative outside the national strategy, I don’t think it would have had the same impact. Being incorporated into a broader policy framework gives it real weight. The Showcase is not a ranked list—it’s a platform to introduce EMs to investors. There’s no hierarchy—just an opportunity for discovery. The fact that it will continue makes it a valuable mechanism.

Mr. Nomura: On the other hand, we asset owners have traditionally placed heavy emphasis on track records. That focus has sometimes made us overlook future potential. EMs often have small teams and less developed infrastructure compared to large firms, so traditional DD approaches don’t always apply. We need new evaluation frameworks.

We may not be able to invest large sums from the start, but we can begin small, do more and build a diversified portfolio, and gradually discover a variety of EMs. This will help revitalize Japan’s asset management industry. The key is how to identify EMs with distinctive strengths across asset classes.

Discernment must go beyond performance and include future potential, strategy uniqueness, and the manager’s philosophy. Collaborating with strong asset managers and DD specialists, we’ll seek new ways to conduct DD. As large asset owners, we can pave the way so that others feel comfortable following, saying, “If Japan Post Insurance invested, maybe we can too.”

These movements will direct capital to Japan’s equity markets and underdeveloped segments, ultimately supporting market growth and company development, which benefits end investors.

That said, this is a first for us too. We must proceed carefully with input from asset managers and consultants. We need clear criteria for what to invest in and what to avoid.

Supporting all EMs unconditionally is not the goal. Sharp discernment is still required. We must first learn through the "showcase" and gradually build our discernment skills. We hope this will evolve into a structure that allows us to move to the next phase.

Ms. Onozuka: Thank you. Let me reflect a bit. I think three keywords emerged from our conversation so far:

First, discernment or "mekiki". This is essential for asset owners and experts when partnering with managers. One reason discernment hasn’t taken root in Japan may be that it hasn’t been tied to accountability. Decision-making processes—why this investment was chosen, what makes our discernment strong—haven’t been clearly explained. Reactions have been based solely on outcomes.

In contrast, the UK and U.S. have long valued accountability, creating environments that support discernment. Japan is also entering a new era where disclosure and dialogue are encouraging this shift.

Second, “diversification.” As in startups, not every EM will succeed. There’s no guarantee of long-term continuity. Even so, a spirit of challenge and broad diversification is key.

Third, the concept of a catalyst or "yobimizu". In sustainable finance, this is vital. In early stages, worthwhile efforts often go unnoticed or lack sufficient capital. Whether it's decarbonization or social impact, initial push from supporters is crucial. In this context, Japan Post Insurance stepping in early serves as a catalyst, enabling EMs like Cadira Capital Management to gain visibility and grow in value—socially and economically.

—To be continued in Part 2—