--Has the investment trust industry been affected by geopolitical factors such as pandemics and conflicts?
Atsuto Sawakami (SAWAKAMI): Basically, we can say that nothing has changed. Japanese investment trusts themselves are a large industry, with more than 6,000 publicly offered investment trust funds available for purchase.
This is only with regard to Japanese investment trusts, but in the Japanese investment trust industry, investment trust companies conduct investment trusts for the purpose of sales, so, to put it crudely, it hardly matters if there is a pandemic somewhere or a conflict somewhere.
--What exactly do you mean by ‘investment trusts for sale’?
SAWAKAMI: ‘Investment trusts for sale’ means that they are tools for major securities companies and banks to earn commissions. Many investment trust companies in Japan are subsidiaries of major securities firms and banks. And the parent companies, the major securities firms and banks, want to make more money from sales commissions than from long-term investment management.
The reason for this situation is that commissions are the main source of income for the major securities companies and banks. This means that they need their customers to trade frequently.
This is called turnover trading, and new products are needed to get customers to trade more frequently. This is why major securities firms and banks have their subsidiary mutual fund companies set up new mutual funds and sell them to earn commissions.
--Is this situation unique to Japan?
SAWAKAMI: The idea of investment trusts was originally created for ordinary people. Its origins date back to the Napoleonic Wars in 19th century Europe.
In the past, investment management was reserved for wealthy people. War widows and others received a lump sum from the state, and even if they wanted to invest it, the small lump sum was not individually handled by specialists like the wealthy. The idea of investment trusts is said to have emerged spontaneously there.
However, as explained earlier, in Japan it has become the exact opposite - a commission earner for major securities companies and banks.
