August 23, 2019 / 11:54 AM / a month ago

RPT-Japan's biggest asset manager to expand into U.S. market -CEO

(Repeats story, adding byline)

By Simon Jessop

LONDON, Aug 23 (Reuters) - Japan's biggest asset manager plans to expand into the United States for the first time as part of efforts to win more money from overseas clients, its chief executive told Reuters.

Sumitomo Mitsui Trust Asset Management (SMTAM), which manages around $600 billion in assets, aims to set up an office in New York, possibly next year, with an initial staff of around 10 people, Yoshio Hishida said.

The company, part of Sumitomo Mitsui Trust Holdings , currently has overseas offices in London, Hong Kong and Singapore, with 12, 10 and two staff, respectively. Total group headcount is more than 500.

The U.S. move is the latest step in SMTAM's strategy to diversify away from its core Japanese market, which provides the bulk of its assets, including from the country's Government Pension Investment Fund - the world's biggest pension scheme.

"This is our brand new strategy, to expand into New York," Hishida said in an interview. "We're at an early stage, but it [the set-up] will be similar to the UK," with a focus on serving institutional clients such as pension schemes and endowments.

"At the moment, we have almost nothing from U.S. and North American clients; the U.S. is a very tough market for non-U.S. managers, in general."

As well as staffing the office with sales and research personnel, SMTAM would also look to develop new products especially for the U.S. market, potentially in areas such as Japanese microcap stocks and sustainable investing.

The U.S. move is in addition to plans already laid for a continental European branch in Luxembourg, in response to Britain's decision to leave the European Union.

SMTAM currently manages around $20 billion in assets for overseas clients, many of which are based in the Middle East and increasingly looking to move more of their money away from large U.S. and European investment managers, Hishida said.

"Based on the dynamic change of the politics and markets... they've realised it's maybe better to diversify the managers, as well as the market.

"If they think about non-U.S. managers, especially APAC managers, for Japanese equities as well as the passive strategies, fortunately, we've been selected as one of (them).... we didn't see that seven years ago."

The group had grown its overseas client assets from $1.4 billion in 2012 and was looking to maintain that rate of growth, although it had no formal target, he said.

Japanese asset managers have increasingly looked to buy foreign rivals to bolster fee revenue, including Sumitomo Mitsui Financial Group (SMFG), which on Friday said it planned to buy British firm TT International. This follows last year's move by Mitsubishi UFJ Trust and Banking to buy Commonwealth Bank of Australia's fund arm.

While SMTAM, currently among the world's 10 biggest non-U.S. managers, would consider buying another asset manager to help fuel its growth, Hishida cited challenges in integrating two often quite different corporate and investing cultures.

"The integration of an asset management company is very tough, especially to do it quickly and properly. It's one option, but I don't have any particular plan, at this moment," he said. (Additional reporting by Tomo Uetake in Tokyo; Editing by Susan Fenton)

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