Sumitomo Mitsui Trust, Apollo launch alternative asset fund

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TOKYO — Sumitomo Mitsui Trust Holdings has launched an investment fund focused on private assets with U.S.-based Apollo Global Management, Nikkei has learned, amid growing demand for these products in Japan.

Private assets, or alternative assets, refer to unlisted equity, debt, infrastructure and other assets that are not traded on the public market. The new fund, offered through a unit of Sumitomo Mitsui Trust, is designed to deliver long-term stable returns by investing in various assets around the world, unlike typical funds that focus on a specific type of private asset.

The Japanese financial group formed a strategic partnership with Apollo in July 2022, committing $1.5 billion to a portfolio of alternative assets managed by the U.S. partner.

Sumitomo Mitsui Trust plans to spend 500 billion yen ($3.18 billion) on investments in and acquisitions of asset managers. It will pursue further partnerships to expand its portfolio of private assets to 24 trillion yen in fiscal 2030, more than triple the amount in fiscal 2023.

Assets like unlisted shares, debt and infrastructure are less vulnerable to changes in interest rates and the stock market than conventional offerings, and tend to deliver high returns over the long term.

Japan’s market for private assets remains small. Of the $11.9 trillion held in funds globally as of March 2023, Japan accounted for $400 billion, according to Sumitomo Mitsui Trust.

This is partly due to Japan’s wealthy investors focusing more on real estate. Properties made up nearly 80% of assets held by the richest 1% in Japan, with financial assets accounting for just over 20%, Nomura Research Institute reports. But globally, properties accounted for just over 10% of high-net-worth investors’ holdings and financial assets around 70%.

“Since we partnered with Apollo, we have seen a growing interest in private assets from retail investors thinking about the long term,” said Futoshi Itani, senior managing executive officer at the holding company’s Sumitomo Mitsui Trust Bank.

Sumitomo Mitsui Trust Holdings will also launch a product for pension clients with Apollo this fiscal year. It released a separate product with Apollo unit Athene Holding in April that has attracted around 20 billion yen from at least 10 clients.

Sumitomo Mitsui Trust Holdings manages nearly 40 trillion yen in assets under its pension and retirement products.

“We will increase the supply of private assets to pension clients, expanding the wealth of the individuals who ultimately receive the payments,” Itani said.

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Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

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