1. ESG Investment
The primary role that Sumitomo Mitsui Asset Management (SMAM) is required to fulfill as an
asset management company is to deliver strong investment management performance, and
we believe that enhancing our research capabilities is vital for doing so.
When selecting companies to invest in that can achieve sustainable growth, we consider it
important to analyze non-financial factors of the companies, including intangible value such
as brand value, development capabilities, and employee motivation among others. At
SMAM, we have incorporated financial factors as well as non-financial factors in our
analysis and evaluation of companies, aiming to ensure higher quality research and better
investment performance. Recently, environmental, social and corporate governance (ESG)
factors have been focused as non-financial factors that impact a company’s value over the
medium to long term. The idea that non-financial factors influence medium to long-term
corporate value is consistent with our research approach.
We believe that we would be able to make our research more sophisticated by explicitly
analyzing non-financial factors such as ESG and to improve investment performance. As the
companies know that SMAM is doing such analysis, they could be encouraged to address
ESG issues and might be able to improve their business performances over the long term by
doing so. We also believe that improving the long-term performance of companies will
contribute to the sound development of society.
We intend to continue to improve the quality of our research and investment management
performance, including through analysis of non-financial factors, and by doing so contribute
to the medium to long-term growth of our customers’ assets.
2. ESG Investment
The UN Principles for Responsible Investment (PRI)
The United Nations Principles for Responsible Investment (PRI) are a set of principles for
institutional investors to incorporate environmental, social and corporate governance (ESG)
issues in their investment analysis and decision-making processes as well as ownership
policies and practices, aiming to improve long-term investment returns for their beneficiaries.
The PRI were announced in April 2006 by former UN Secretary General Kofi Annan.
SMAM endorsed and became a signatory to the PRI in March 2010.
•i The Principles for Responsible Investment•j
1. We will incorporate ESG issues into investment analysis and decision making
2. We will be active owners and incorporate ESG issues into our ownership policies
3. We will seek appropriate disclosure on ESG issues by the entities in which we
4. We will promote acceptance and implementation of the Principles within the
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the
3. ESG Investment
SMAM offers the Japanese Equities ESG Active Fund, which is focused on achieving
superior investment performance, to its institutional customers. For details, please contact
International Marketing Department•i +81-3-5405-0537•j or send messages to ‘contact us’.
For information about SMAM, please visit our website at the following URL.
Independent ESG evaluation focused
on the possible impact on the share
Stock selection through a combination Aiming to
of fundamental analysis of companies’
results, outlook, valuation, and so forth, steadily outperform
and ESG analysis the market
Increase investment opportunities by
conducting theme-based analysis of
various ESG-related issues
Our Equity Research Group analysts carry out ESG evaluation.
By combining fundamental analysis and ESG evaluation, and also pursuing high
returns through the use of ESG theme-based analysis, we are aiming to improve our
4. Risks and expenses
Notes regarding investment advisory contracts and discretionary
investment management contracts
Risks relating to investment advisory contracts and discretionary investment
Financial products and financial derivatives products invested in under discretionary
investment management contracts or those products advised in invest under investment
advisory contracts may incur losses resulting from changes in the market indices of those
products interest rates, foreign exchange rates or other indicators in financial instruments
Factors subject to change include: risk of fluctuations in prices of marketable securities, etc.;
credit risk of issuers, etc.; risk of fluctuations in interest rates and financial markets; liquidity
risks, etc., such as the inability to execute a transaction under conditions of sufficient
liquidity (and with regards to investments denominated in a foreign currency, foreign
exchange rate risk, etc.).
Accordingly, the client's investment principal amount is not guaranteed. A decline in the
value of financial instruments, etc., could cause a loss of principal.
Fees, etc., relating to investment advisory contracts and discretionary
investment management contracts
To a client who is a foreign entity, management fee under an investment advisory contract or
a discretionary investment management contract is to be agreed individually upon
completion of the contracts.
Under certain contracts, a performance fee is applicable.
These fees, to be agreed individually, cannot be specified beforehand.
With regard to charges and commissions other than management fees, there may be
variable additional costs incurred, including sales commissions, operational fees for
investment trust funds and other applicable charges.
There may be other costs incurred depending on the specifics of contracts, including
5. variable costs by investment performance or costs determined by trust banks.
The total costs can not be specified beforehand due to the aforementioned reasons.
The above risks, and fees, etc., vary according to the contract details, investment conditions,
etc. Thus, before entering into a contract, prospective clients are requested to first confirm
all relevant items within the "Documents to be read prior to the conclusion of a discretionary
investment management contract."
6. Notes regarding investment trust products
Investment trusts: risks
Investment unit trusts mainly invest in securities that are subject to price fluctuations of
indices of domestic and overseas equities and public and corporate bonds, and thus the unit
prices of such funds may also fluctuate depending on changes in the market indices of such
assets, and changes in foreign exchange rates in case of assets denominated in foreign
The price of the unit is therefore exposed to: the risk of fluctuations in the price of
marketable securities, etc.; risk of fluctuations in interest rates or financial markets; liquidity
risk, such as the inability to execute a transaction under conditions of sufficient liquidity;
credit risk of the issuer of the market securities, etc., and with regards to investments in
assets denominated in a foreign currency, foreign exchange rate risk.
Accordingly, the client's investment principal amount is not guaranteed.
A mutual fund is not protected by Deposit Insurance Corporation of Japan.
When you buy a mutual fund from a financial instruments firm other than security companies,
it is not protected by Japan Investor Protection Fund.
Investment trusts: expenses
The following expenses are to be borne by the client.
Expenses to be borne directly
Subscription fee Maximum 3.675% (3.5% before tax)
Redemption (cancellation) fee Maximum 1.05% (1.0% before tax)
Trust asset custody fee Maximum 0.50%
Expenses to be borne indirectly during the holding period
Management fees Maximum 1.995% (1.9% before tax)
The following fees and commissions are also charged from the trust assets: audit fees;
brokerage commissions and other charges on traded securities, derivative transactions, etc;
and charges, etc., for the custody, etc., of assets overseas. Furthermore, when the fund
invests into other funds, asset management fees and other expenses of those funds are
7. As the amount of such charges depends on the condition of transactions, etc., SMAM
cannot provide an upper limit or method of calculation for them.
* For similar reasons, SMAM cannot provide the total amount or its upper limit of the fees,
charges or expenses charged to the fund or the client, or the method of calculation thereof.
The above risks and charges pertain to investment trusts in general. As regards the
Subscription fee and other fees, the rates listed above are the highest among all investment
trusts managed by SMAM.
Sumitomo Mitsui Asset Management is licensed and registered in Japan.
Registered Number: Kanto Regional Finance Bureau (KINSYO) No.399
Member of Japan Securities Investment Advisors Association and The Investment Trusts