Hiromichi Mizuno was named chief investment officer of Japan’s Government Pension Investment Fund, the world’s biggest manager of retirement savings, in 2014. He has since led a push to increase equity holdings and advocated for incorporating ESG, or environmental, social and governance, factors into investing.
Question: What are the biggest changes in the investment world you see coming in the next five to 10 years?
Mizuno: Adoption of technology, including AI and ESG integration into all asset classes. I believe artificial intelligence will be able to either replace or enhance the asset managers’ work, particularly for short-term trading.
Question: What are the implications?
Mizuno: Asset managers have to adjust their conventional business model. Investors will be more focused on the long-term investment theme, as AI will take over the short-term trading. In other words, investors will shift their focus to the long-term sustainability of their portfolio, and more focus on their investment themes like ESG.
Question: Do you see a lot of jobs being cut as a result?
Mizuno: I wouldn’t be surprised if a lot of people lose their jobs because AI replaced their routine. But I also believe in human wisdom. I think the long-term thinking and the ESG-like non-numerical, non-quantitative information will continue to require human interpretation. I believe AI will release the human resource to do something else.
Question: What’s the future of ESG investing?
Mizuno: In the long run, “ESG-themed investment” will be irrelevant, as the whole market starts to use it for pricing in their investments.
Question: What’s the biggest shock the industry doesn’t see coming?