Japan’s Asset Management Nation Strategy Is Not a Policy Piggy Bank

The next stage of Japan’s asset management policy should create investable opportunities while preserving private-sector discipline and the best interests of beneficiaries.

From Asset Formation Policy to a Growth-Oriented Capital Allocation System

On July 21, 2026, the Japanese government released its Basic Policy on Economic and Fiscal Management and Reform 2026, commonly known in Japan as the Honebuto Policy 2026. The policy serves as a central framework for the Takaichi administration’s approach to “responsible and proactive fiscal policy.”

As I read the document, however, I found very few references to Japan’s ambition to become an “asset management nation.” For a moment, I wondered whether the government had quietly lowered the flag on this initiative.

That conclusion would have been premature.

At around the same time, the government also published the Financial Strategy to Promote Growth Investment, a comprehensive package of financial-sector measures linked to the Japan Growth Strategy. Its subtitle explicitly describes the package as an “upgrade” of Japan’s asset management nation initiative.

The change should therefore not be understood as an abandonment of the policy.

Rather, Japan appears to be moving from a stage in which the asset management nation initiative was presented as a stand-alone financial policy toward a stage in which asset management is incorporated into the broader financial architecture supporting the country’s overall growth strategy.

The original Policy Plan for Promoting Japan as a Leading Asset Management Center, formulated in 2023, focused primarily on strengthening each participant in the investment chain. These participants included households, financial product distributors, asset management companies, asset owners and corporate issuers.

The new financial strategy expands the scope considerably. It addresses corporate growth investment and business restructuring, corporate bond and loan markets, private equity and venture capital, regional finance and even on-chain financial infrastructure. The apparent objective is to reorganize these elements as part of a broader circulation of capital throughout the Japanese economy.

Japan’s asset management nation initiative is therefore moving beyond the development of pathways from savings to investment.

The next question is how capital that has moved into investment can be allocated to productive growth. In other words, the initiative is entering a stage in which Japan must design an effective capital allocation system for the economy as a whole.

Policy Frameworks Have Advanced, but the Industry Structure Has Not Changed Enough

I have a positive view of many of the measures implemented under the government’s asset management nation policy in recent years.

The expansion of NISA has significantly broadened the channels through which household financial assets can move into investment. Issues that had previously remained vague or received insufficient policy attention have also been placed more clearly on the agenda.

These include the Asset Owner Principles, follow-up initiatives involving major financial groups, the Emerging Managers Program commonly referred to as Japan’s EMP, and efforts to improve the investment management capabilities of corporate pension funds and universities.

Product governance has also become an important policy issue. Asset managers are increasingly expected to assess the value that an investment product provides to beneficiaries throughout its lifecycle, from product planning and launch through ongoing management and eventual redemption or termination.

These are meaningful advances.

However, it would be difficult to conclude that the structural problems of Japan’s asset management industry have been resolved.

Distribution Dependence Still Shapes Product Strategy

Financial product distributors continue to control much of the customer interface with end investors. At the same time, many asset management companies remain dependent on asset inflows from their parent companies or particular distribution institutions.

Meanwhile, individual firms maintain overlapping middle- and back-office functions. There are also many areas of asset administration performed by trustee banks that have not yet been sufficiently standardized or automated.

This high-cost structure raises the barriers to product development and new market entry. It also weakens the earnings base of asset management companies.

It would be an overstatement to say that this dependence automatically distorts individual investment decisions.

The more immediate effect is often seen one step earlier, in product strategy.

When products that are easy for distributors to explain, sell over a short period and gather assets into are prioritized over products that beneficiaries genuinely need for long-term asset formation, the starting point for product development can shift away from the beneficiary and toward the commercial priorities of the distributor.

Product Governance Requires Better Information Flows

Effective product governance cannot be achieved merely by reviewing sales figures after a product has been launched.

Asset managers must examine what problem the product is intended to solve, which customers it is designed for, whether those target customers are actually purchasing it and whether long-term ownership is producing the expected benefits.

This also requires a continuous flow of information from distributors back to asset managers.

Relevant information may include the characteristics of purchasers, holding periods, redemption patterns and the reasons customers exit a product. Without such information, it is difficult for an asset manager to determine whether a product is reaching its intended market or achieving its original purpose.

Japan has made progress in developing its policy framework. Yet many practical and structural issues remain unresolved, and the productivity and profitability of the asset management industry have not increased sufficiently.

As a result, the economic foundation needed for asset managers to pursue genuinely beneficiary-oriented product strategies is still incomplete.

Household and Pension Assets Are Not a Policy Piggy Bank

There is, however, one potentially dangerous issue within the current “upgrade.”

The government has identified 17 strategic fields and is encouraging public- and private-sector financial institutions to supply growth capital to them.

Government involvement can be reasonable in fields where the market alone may not generate sufficient investment. These may include economic security, advanced technologies, energy and social infrastructure.

But policy importance and investment attractiveness are not the same thing.

A project may be worthy of government support from a national policy perspective. Unless it offers an expected return commensurate with its risks, however, it is not necessarily an appropriate investment for assets held on behalf of beneficiaries.

Policy Importance Does Not Automatically Create Investment Value

The government should not view the asset management industry as an automatic supplier of capital for public policy objectives.

Asset management companies and asset owners have a responsibility to pursue the best interests of their beneficiaries.

They cannot allocate beneficiary assets to a sector solely because it has been designated as a national priority when the expected profitability does not adequately compensate for the investment risks.

In fact, declining to make such an investment may be precisely what their fiduciary or stewardship responsibilities require.

Government Should Bridge the Investability Gap Transparently

The role of government should not be to designate investment targets and then mobilize private assets toward them.

Its role should be to bridge, in a transparent manner, the gap between projects that are necessary from a policy perspective and the conditions required for those projects to become commercially investable.

This may involve subsidies, guarantees, subordinated investment, tax measures or regulatory reform.

Only when these measures create an expected return that is appropriate for the risk does a genuine opportunity for private capital emerge.

Where the economics still do not support private investment, the government should bear the cost of closing that gap openly as a matter of public policy.

Japan’s asset management nation initiative should not become a vast piggy bank from which household savings and pension assets can be freely drawn to implement government policy.

The government can help create investment opportunities. It should not determine investment value.

Caution is also needed when amounts of capital supplied or numbers of investments are presented as evidence of policy success.

Providing capital may look like an achievement at the moment the investment is made. But if the recipient cannot generate value above its cost of capital, the result may not be growth investment at all. It may simply lock capital into a low-return business.

The relevant question is not how much capital the government has encouraged the market to deploy.

It is how effectively the government has created conditions under which private investors can independently conclude that an investment is worthwhile.

Government Creates Investability; Private Investors Select

To prevent the asset management nation initiative from becoming a simple capital mobilization program, the roles of government and the private sector must be clearly separated.

The government should bring strategically important projects closer to conditions under which private capital can invest.

Asset management companies and asset owners should then decide, even after those conditions have been created, whether the investment is appropriate when assessed against the best interests of their beneficiaries.

Government policy and market mechanisms are not necessarily in conflict.

However, if their respective roles are confused, discipline in capital allocation will be weakened.

The Asset Management Industry Also Needs Structural Reform

At the same time, structural reform is also required within the private asset management industry.

Common functions such as middle- and back-office operations, product structuring and asset administration should be standardized and shared where appropriate, reducing the fixed costs duplicated across individual firms.

Japan should reconsider an industry structure in which each asset management company attempts to maintain everything internally—from high-value activities such as research, investment decision-making and portfolio construction to middle- and back-office processes that could be standardized.

Functions that can be standardized should be entrusted to specialized external providers where appropriate. The industry can then move toward a more horizontally specialized structure in which each participant concentrates on the areas where it has genuine expertise.

It is also important to develop a revenue structure in which asset management companies are evaluated for investment capability, product design and the outcomes delivered to beneficiaries, rather than primarily for their ability to accumulate assets through the distribution power of affiliated financial institutions.

Productivity Is the Foundation of Beneficiary-Oriented Management

Improving productivity is not merely a cost-cutting exercise.

It should strengthen the earnings base of asset management companies and allow them to reinvest resources in investment professionals, product development, research, data and a deeper understanding of beneficiaries.

That is how asset managers can establish the economic independence needed to maintain a beneficiary-oriented product strategy.

The government’s targets are easy to understand: ¥250 trillion in annual domestic investment by fiscal 2040 and an increase to 40% in the share of household financial assets held in equities, investment trusts and debt securities.

But the amount of capital that moves should not be the only measure of success.

Japan should also examine whether suitable products have been provided to beneficiaries, whether investee companies have generated value above their cost of capital and whether the resulting benefits have returned to society through wages, employment, tax revenue and investment returns for beneficiaries.

The Real Test Comes After the Capital Has Been Mobilized

A credible asset management nation cannot be built solely by constructing a larger pipeline from household assets into designated growth sectors.

It requires a system in which the government creates investable opportunities, independent private-sector investors apply rigorous selection standards and the resulting value is returned to beneficiaries.

Japan must move from being a country capable of gathering capital to one capable of allocating it intelligently.

The question is whether the current upgrade will end as another capital mobilization initiative or develop into a genuine capital allocation system with effective market selection.

The real test of Japan’s asset management nation initiative begins after the capital has been raised.

FAQ

What does Japan mean by becoming an “asset management nation”?

The initiative seeks to improve the entire investment chain connecting household assets, financial product distributors, asset managers, asset owners and investee companies. Its goals include supporting household asset formation, strengthening the asset management industry and directing capital toward sustainable corporate and economic growth.

Why is the strategy now being upgraded?

The earlier stage focused mainly on moving household assets from savings into investment and improving the functions of participants in the investment chain. The new stage places greater emphasis on how invested capital can support corporate growth, business restructuring and strategically important areas of the Japanese economy.

Should asset managers invest in sectors identified as national priorities?

Not automatically. A sector’s importance to government policy does not by itself make an investment appropriate for beneficiary assets. Asset managers and asset owners must independently determine whether the expected return is commensurate with the risk and consistent with the best interests of beneficiaries.

What role should the Japanese government play in attracting private capital?

The government should create conditions under which strategically important projects can become commercially investable. Possible measures include subsidies, guarantees, subordinated capital, tax incentives and regulatory reform. Private investors should retain responsibility for deciding whether the resulting opportunity is worth investing in.

What structural reforms are still needed in Japan’s asset management industry?

Further standardization and sharing of middle- and back-office functions, product structuring and asset administration could reduce duplicated fixed costs. Asset managers would then be better positioned to focus resources on investment research, portfolio construction, product development and beneficiary outcomes.

Author: Keiichi Ohara, President & CEO, JAMP Corporation
About This Article
This article is an adapted English edition of JAMP Perspective No. [ISSUE NUMBER], originally written in Japanese by Keiichi Ohara and distributed on July 29, 2026. It has been edited and supplemented where necessary to make the discussion and its Japan-specific context clearer to readers outside Japan. It is therefore not a direct translation of the original Japanese newsletter.
This article is provided for informational purposes only and does not constitute investment advice or a recommendation regarding any financial product.