Japan’s Stewardship Code

Response to “Japan’s Stewardship Code” and the “United Nations-backed Principles for Responsible Investment”

HC Asset Management Co., Ltd.
Noriyuki Morimoto, Chief Executive Officer

On November 16, 2017 we revised our basic policy concerning the “Principles for Responsible Institutional Investors (Japan’s Stewardship Code (Second revised Version))” and the “United Nations-backed Principles for Responsible Investment”, which we accepted on May 30, 2014 and make the following announcement.

Details

1．Policy to fulfill responsibility

We discover investment opportunities in light of strict criteria by seeking out the themes that will become the source of growth from the entire world to respond to the social capital requirements as a provider of business finance.
We invest by combining various strategies corresponding to the investment purpose, carefully selecting the investment trusts managed by other investment management companies and funds of cooperatives, etc. with a very high level of expertise who also share our own values.
When selecting a fund, in addition to examining the investment opportunities, we focus on whether we can empathize with the investment philosophy and the mission of the investment management company with expertise in each area. We discuss countermeasures with the investment management company and promote improvements as necessary and by determining that continued investment is appropriate we take joint responsibility.
When investing in businesses, we examine the capital requirements and financial soundness of the company, and whether or not assets are to be acquired such as loans, corporate bonds, mezzanine debt, equities or real estate corresponding to the cash flows.
Particularly when investing in funds that hold equities for the medium to long-term, we select funds that carefully select management that spares no effort to achieve sound growth and development of the world following due confirmation that equities are ranked low in the capital structure. The investment management companies of all the funds in which we invest confidently select issues of companies with growth potential as well as focusing on the companies’ capacity for sustained growth such as the management’s funding methods and incentive based remuneration structure.
We fulfill our responsibility as an asset manager that has accepted the “Principles for Responsible Institutional Investors (Japan’s Stewardship Code)” and the “United Nations-backed Principles for Responsible Investment” through investment decisions based on such selection.
We regularly report to our clients about how we are fulfilling our responsibilities.

2．Policy for managing conflicts of interest

When selecting or conducting regular monitoring of funds, we check for any concerns about conflicts of interest with each fund, grasping matters such as the shareholder structure and issues held by the investment management company of each fund.

3．Policy concerning the exercise of voting rights and disclosure of results

We select funds that have policies on exercising rights to invest in the sustained growth of investee companies and, when selecting or conducting regular monitoring of funds, we confirm the compatibility with our basic approach, request an explanation on the status of how voting rights are exercised and grasp the circumstances.
Note that since it is difficult to disclose the voting results for some companies, we have not considered disclosure by aggregating the voting results for each fund.
We report the voting results to the extent possible in response to client requests.