Nikko Asset Management Co., Ltd.
Initiatives on code of conduct regarding
fiduciary/ESG principles
January 29, 2021
Nikko Asset Management Co., Ltd.
Junichi Sayato, Representative Director, Executive Chairman and Co-CEO
Hideo Abe, Representative Director, President and Co-CEO1

At Nikko Asset Management (“Nikko AM”), we regard acting in the best interests of the customers who entrust us with their assets
as our primary mission. This means that we attach the highest importance to fiduciary and ESG principles in our corporate
philosophy and business activities.
In view of Nikko AM’s status as a responsible institutional investor, we also position Environment, Society and Governance (“ESG”)
assessments and stewardship activities at the heart of our investment process. With this in mind, we strive constantly to help
investee firms to enhance their long-term corporate value and to help society grow sustainably.
We specialize in the creation of funds and investment management products that meet the asset management needs of a diverse
range of investors, from individuals to institutions, in a variety of different forms. This involves working daily to help ourcustomers build and manage their assets in any way we can by delivering products that inspire them, by devising ways to help
them invest more effectively, and by clearly informing them of the risks and returns that our products involve. We also endeavour
to provide unbiased information on societal and market conditions to help our customers make investment decisions. This reportprovides examples of our achievements in these areas in 2020 (January to December) and explanations of our activities using
indicators we have voluntarily adopted.

1.

Activities for individual and corporate clients

1.1

Activities for individual clientsAs an asset management company, our paramount mission is to be useful to our customers in their medium-to long-term asset
building. Realizing this mission is not just a case of delivering strong investment management outcomes, however. We also needto put a great deal of effort into every aspect of our services, including understandably and simply imparting accurate knowledgeof investment management and the products we offer, proactively delivering timely and appropriate information on market
trends from a neutral standpoint to help customers make investment decisions, providing products that are suitable for mediumto long-term investment that serves customer needs, and helping customers to manage risks.
Our initiatives in this area, together with the results we have delivered to date, are detailed below.
1.1.1

Expected Average holding periods of top ten funds for AUM

RankiFund name
1 Global Prospective Fund
Global Robotics Equity Fund (Semi-annual
2
Settlement Type)Nikko Triple Fund (Property Bond Equity) Monthly
3
Dividend Payment Type
4 Smart Five (Monthly Settlement Type)
Global Robotics Equity Fund (Annual Settlement
5
Type)
Nikko LaSalle Global REIT Fund (Monthly
6
Dividend Payment Type)
Global Three Times Triple Fund (Annual
7
Settlement Type)
8 Global Fintech Equity Fund
9 Nikko Index Fund 225
Global Fintech Equity Fund (Semi-annual
10
Settlement Type)

Expected average holding
Fund investment
AUM (JPY 100M)
period (years)
universe/type
5.31
8,192 Foreign equity/active
3.17

3,775 Foreign equity/active

5.96

3,621 Balanced

12.59

3,599 Balanced

2.32

3,140 Foreign equity/active

4.47

3,103 Global REIT/active

1.52

2,848 Balanced

1.56
1.90

2,611 Foreign equity/active
1,982 Japanese equity/passive

3.69

1,866 Foreign equity/active* Expected average holding period is a theoretical period calculated by "annual average AUM ÷ annualized redemption amount"2

(calculation period is year 2020). The figure is different from the actual average holding period of the investor.
* Figures shown for funds that have redemption amounts that are much smaller than their subscription amounts or AUMs may belonger than the actual holding periods.
* AUM as of December-end, 2020. Top 10 AUM funds excluding ETFs and MRFs.
1.1.2 AUM and number of asset-building funds (publicly offered equity funds excluding ETFs; annual or semi-annual
annual account settlement)

AUM (JPY Trilion) [left axis]
181

4.5

Number [right axis]

185

4.0

180

3.5

175
171

3.0

168

2.5

166

2.0

165

165

160

159
4.3

1.5

0.0

155
150

1.0
0.5

170

1.5
Mar 2016

1.5
Mar 2017

2.6
Mar 2018

2.7
Mar 2019

2.6

Mar 2020

145
Dec 2020

140

As an asset management company, our paramount mission is to be useful to our customers in their medium-to long-term asset
building. The asset management business is one in which firms can only grow if they also grow their customers’ assets. We are
therefore increasing the number of publicly offered equity funds that are suitable for long-term asset building (excluding ETFs;
annual or semi-annual annual account settlement). As of December 2020, we have 168 such funds at Nikko AM with a total AUM
of approximately JPY 4.3 trillion.

3

Major publicly offered funds that we deem suitable for customers' medium- and long-term asset-building needs (examples)

Fund investment target

Fund name

Japanese
Equities/Active

Japan Robotics Equity Fund
Nikko Japan OpenNikko DC Ｊ Growth

Foreign
Equities/Active

Global Robotics Equity Fund
Global Fintech Equity FundDistribution
frequency
Annual,semiannual
AnnualAnnualAnnual,semiannual
Annual,semiannual

AUM
(JPY
100M)
699
371
384
6,915
4,478

Foreign Bonds/Active

Nikko Developed Countries High Yielding Bond Open
(Growth Type)

Annual74

Balanced

Smart Five (Annual Settlement Type)

Annual578

Fine Blend (Growth Type)

Annual270

Nikko GW7 Eggs

Annual

507

Nikko Triple Fund (Property Bond Equity) Growth Type

Annual164

Global Three Times Triple Fund (Annual Settlement Type)

Annual2,848* AUM as of December-end, 2020. Aggregate value is shown for series funds. AUM is in descending order by fund investment destination.
* For funds with multiple settlement types, the hyperlink is set to the fund with the largest AUM.

1.1.3

Initiatives for cumulative investment including cumulative Nippon Individual Savings Accounts

In order to meet cumulative investment needs, in addition to cumulative NISAs, we also promote the use of defined contributionplans, personal defined contribution pension plans and general accounts. Through these products, we advocate long-term,
cumulative and diversified investments to those who wish to build up their assets. We also provide assistance to distributors forcumulative investment initiatives by not only providing products but also creating and offering a variety of support tools.
We have now registered five of our funds for eligibility in the cumulative NISA system.
We also hold events such as the “Product Strategy Seminar” for distributors, at which we emphasize the effectiveness of
cumulative investment in enhancing returns for investors.

4

1.1.4

AUM and Performance of Japan-domiciled publicly offered funds (including ETFs and MRFs)

Breakdown by investment assets * Numerical values indicate AUM (0.1 billion yen)

Multiple asset investment
100%
80%

Bond investment

Equity investment

8,296

8,656

10,054

11,603

31,25032,39532,74630,812

59,34875,331

98,877

104,715

97,293

Mar 2016

Mar 2017

Mar 2018

Mar 2019

Mar 2020

16,64333,094

16,71437,64860%
40%

150,67220%0%

Dec 2020

Total AUM of Japan-domiciled publicly offered funds(0.1 billion yen)
Mar 2016
98,894

Mar 2017

Mar 2018
116,382

Mar 2019

141,678

Mar 2020
147,130

Dec 2020
147,030

205,034* Figures for publicly offered funds are aggregated. including ETFs and MRFs*”Equity Investment” includes REITs.

We consider our investment division as a team of professionals in which fund managers and analysts forge their own career
paths, and we reflect that status in their appraisals and treatment. We also employ an appraisal and compensation structure thatemphasizes medium- and long-term investment performance. This is supported by a global system we have introduced to retain
key fund managers. We try to enhance the performance of our funds through these appraisal and compensation frameworks.
Out of the total assets in the publicly offered funds that we manage on behalf of our customers (as of December-end 2020),
equity investment funds accounted for 74%, bond investment funds (including MRFs) accounted for 18%, and multiple asset
investment funds/other funds accounted for 8% of the total.

5Equity investment funds: largest returns in past three years
Rank Fund name

Launch date

AUM
(JPY
100M)

Return (inc. dividends) (%)
Since
5 years 3 years 1 year
launch
360
154%
133%
91%

1 Global Fintech Equity Fund (Currency Hedge)
Sep-17
Global Fintech Equity Fund (Currency Hedge Semi-annual Settlement2342
Sep-17Type)
3 Global Fintech Equity Fund2,611
Dec-16
4 Global Fintech Equity Fund (Semi-annual Settlement Type)
Sep-17
1,866
Nov-17468
5 Shenzhen Innovation Equity Fund (Annual Settlement Type)235
Jan-17
6 Global Robotics Equity Fund (Currency Hedge Annual Settlement Type)
Global Robotics Equity Fund (Currency Hedge Semi-annual Settlement
223
7Jan-17Type)
8 Global Robotics Equity Fund (Annual Settlement Type)
Aug-153,140
3,775
9 Global Robotics Equity Fund (Semi-annual Settlement Type)
Aug-15217
10 Listed Index Fund US Equity (S&P500)
Oct-10(Reference index: Japanese equity) TOPIX(Reference index: foreign equity) MSCI All Country World Index (ex. Japan, no hedge, JPY-based)

152%

-

131%

90%

227%
150%
62%
90%

-

128%
125%
61%
46%

83%
81%
61%
32%

89%

-

45%

31%

115%
114%
367%

105%
104%
64%
17%
38%

42%
42%
32%
-1%
16%

29%
29%
10%
5%
7%

* Publicly offered open-end funds (incl. ETFs). AUMs are as of December-end 2020. Funds with AUMs below JPY 10 billion are excluded.
* Please note that the rate of increase / decrease in NAV is theoretically calculated assuming dividend (before tax) was reinvested.

Bond investment funds: largest returns in past three years
Rank Fund name

Launch date1 Global CoCo Bond Fund Yen Hedged Course
Oct-142 Listed Index Fund US Bond (Currency Hedge)
Aug-16
3 Listed Index Fund US Bond (No Currency Hedge)
Aug-16
Nikko PIMCO High Income Sovereign Fund Monthly Dividend Payment4
Sep-03
Type (US Dollar course)
5 Nikko Index Fund International Fixed Income No Hedge (DC)
Dec-02(Reference index) FTSE World Government Bond Index (ex. Japan, no hedge, JPY-based)

AUM
(JPY
100M)

Return (inc. dividends) (%)
Since
5 years 3 years 1 year
launch
109
42%
34%
13%
6%
184
4%
11%
8%
253
16%
9%
3%
166

150%

25%

6%

0%

345

93%

7%
8%

6%
7%

5%
5%

* Publicly offered open-end funds (incl. ETFs). AUMs are as of December-end 2020. Funds with AUMs below JPY 10 billion are excluded.
* Please note that the rate of increase / decrease in NAV is theoretically calculated assuming dividend (before tax) was reinvested.

Multiple asset investment funds/other funds: largest returns in past three years
Rank Fund name

1 Gold Fund Currency Hedge (for SMA)
2 Nikko Triple Fund (Property Bond Equity) Growth TypeNikko Triple Fund (Property Bond Equity) Monthly Dividend Payment
3Type
4 Nikko GW7 Eggs
5 Nikko DC Index Balance （Equity 60）

Launch date

AUM
(JPY
100M)

Sep-17Aug-09Return (inc. dividends) (%)
Since
5 years 3 years 1 year
launch
390
33%
32%
22%
164
103%
27%
14%
3%

Aug-03

3,621

133%

26%

14%

2%

Feb-03
Dec-02

507
128

174%
145%

27%
24%

10%
9%

6%
6%

6

* Publicly offered open-end funds (incl. ETFs). AUMs are as of December-end 2020. Funds with AUMs below JPY 10 billion are excluded.
* Please note that the rate of increase / decrease in NAV is theoretically calculated assuming dividend (before tax) was reinvested.

Top 10 funds in performance for the past one year
Rank Fund name

1 Global Prospective Fund
2 Global Fintech Equity Fund (Currency Hedge)
3 Global All Bio Genome Equity Fund (Annual Settlement Type)
Global Fintech Equity Fund (Currency Hedge Semi-annual Settlement
4Type)
5 Global Fintech Equity Fund
6 Global Fintech Equity Fund (Semi-annual Settlement Type)
7 Global Mobility Service Equity Fund (Annual Settlement Type)
8 Shenzhen Innovation Equity Fund (Annual Settlement Type)9 Asia Healthcare Equity Fund
10 Global Robotics Equity Fund (Currency Hedge Annual Settlement Type)

Launch date

AUM

Return (inc. dividends) (%)

(JPY
Since
5 years 3 years 1 year
100M)
launchJun-19
8,192
142%
126%
Sep-17
360
154%
133%
91%
Jan-19
1,039
118%
90%
Sep-17

234

152%

-

131%

90%

Dec-16
Sep-17Jan-18
Nov-17Jan-15Jan-17

2,611
1,866
560
468
127
235

227%
150%
78%
62%
11%
90%

15%
-

128%
125%
61%
28%
46%

83%
81%
78%
61%
49%
32%

* Publicly offered open-end funds (incl. ETFs). AUMs are as of December-end 2020. Funds with AUMs below JPY 10 billion are excluded.
* Please note that the rate of increase / decrease in NAV is theoretically calculated assuming dividend (before tax) was reinvested.

1.1.5

Fund Efficiency Initiatives

We believe that it is imperative for asset managers to constantly develop and manage more attractive and effective products forinvestors. We strive to achieve this goal through constant efforts to enhance our fund lineups and to expand AUM. However, it isalso true that some of our funds have small AUMs. Funds with smaller AUMs cost more to manage than other funds and are lesslikely to realize the investment policies set out in their investment prospectuses or trust deeds, making it harder to deliver thesustained medium- and long-term investment performances that customers expect.
At Nikko AM, we address this by not only terminating smaller funds once they reach maturity but also terminating them early by
shortening their trust periods based on legally stipulated procedures.
We carried out terminations of 24 publicly offered funds between January and December of 2020 and gained the understandingof beneficiaries for the early termination of ten of them.
These efforts are essential ways for us to maintain the strength of our funds’ product attributes and to deliver strong investment
performances. We firmly believe that the effective allocation of human resources is the key to delivering medium- and long-term
profits to investors.

7

1.1.6 Change in distribution pattern for medium- and long-term investment: composition of Japan-domiciled publicly
offered funds

Ratio of monthly dividend funds
in open-end equity typed
funds (excluding ETF)
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2014/122015/122016/122017/122018/122019/122020/12

The ratio of publicly offered funds (excluding ETFs) that pay out monthly dividends is falling and stood at 27% as of December
2020

1.1.7

Risk/return features of Nikko AM’s key funds

Procedures for selecting Nikko AM’s key funds
1.
2.
3.

Rank Nikko AM’s publicly offered funds (excluding money funds, ETFs and index funds) as of October-end 2020).
If there are multiple series funds among the top funds for AUM, use the funds with the largest AUMs.
For the relevant period, we selected the 20 funds in the below chart as Nikko AM’s key funds (excluding funds that have lessthan a year to maturity) as of November-end 2020.

8

Fund name
Global Prospective FundAUM(JPY100
M)

8,192

1

2
3
4
5
6
7

Launchdate

Asset Class

Jun-19 Foreign
equityGlobal Robotics Equity Fund (Semi-annual
Settlement Type)

3,775

Aug-15 Foreign

Nikko Triple Fund (Property Bond Equity)
Monthly Dividend Payment Type
Smart Five (Monthly Settlement Type)

3,621

Aug-03

Nikko LaSalle Global REIT Fund (Monthly
Dividend Payment Type)
Global Three Times Triple Fund (Annual
Settlement Type)
Global Fintech Equity Fund

3,103

Risk/Return Abbreviatedname on profile＊Graph not shown because
the investment period is lessthan 2 years
Global Robotics (Semi-annual)

equity

3,599

2,848
2,611

Nikko Triple Fund (Monthly
Dividend)
Jul-13
Smart Five (Monthly
Balanced
Settlement)
Mar-04
LaSalle Global REIT Fund
Global REIT
(Monthly Dividend)
Oct-18Global Three Times Triple Fund
Balanced(Annual)Dec-16 Foreign
Global Fintech
Balanced

equityGlobal All Bio Genome Equity Fund (Annual
Settlement Type)

1,039

8

Nikko Developed Countries High Yielding Bond
Open (Monthly Dividend Payment Type)

962

9

10

Global Mobility Service Equity Fund (Annual
Settlement Type)

560

Jan-18 Foreign＊Graph not shown because
the investment period is lessthan 2 years
Developed Countries High
Yielding Bond Open (Monthly
Dividend)
Global Mobility (Annual)

11Japan Robotics Equity Fund (Annual
Settlement Type)542

equityJan-16 JapaneseJapan Robotics (Annual)Nikko GW7 Eggs
Nikko Five Continents Bond Fund (Monthly
Dividend Payment Type)

507
486

equityFeb-03 Balanced
Jun-06 Foreign

Shenzhen Innovation Equity Fund (Annual
Settlement Type)468

Gold Fund Currency Hedge (for SMA)390

Nikko Japan Open371

Aug-98 Japanese＊Graph not shown because
the asset class is other.
Nikko Japan OpenGreater China Equity Fund (Monthly Dividend
Payment Type）

362

equityOct-10 Foreign

Greater China Equity

Nikko World Triple Fund (Property Bond
Equity) Monthly Dividend Payment TypeNikko AMP Global REIT Fund Monthly
Dividend Payment Type A (No Hedge)

313

Sep-05

Nikko Profit Return Growth Stock Open

289

12
13

14
15
16

17
18

19

20

Jan-19 Foreign
equityAug-03 Foreign
bond

bond
Nov-17 Foreign
equitySep-17
Other

Nikko GW7 Eggs
Five Continents Bond Fund(Monthly Dividend)
Shenzhen Innovation

equity294

Nikko World Triple Fund(Monthly Dividend)
Jan-04
AMP Global REIT Fund
Global REIT (Monthly Dividend) A Course(No Hedge)
Jun-91 Japanese J-GrowthBalanced

equity9

1.1.8

Risk/return profile of major funds in past two years (as of December-end 2020)10

1.1.9Risk/return profile of major foreign equity funds in past two years (as of December-end 2020)11

1.1.10 Risk/return profile of major Japanese equity funds in past two years (as of December-end 2020)12

1.1.11 Risk/return profile of major foreign bond funds in past two years (as of December-end 2020)13

1.1.12 Risk/return profile of major global REIT funds in past two years (as of December-end 2020)14

1.1.13 Risk/return profile of major balanced funds in past two years (as of December-end 2020)15

1.1.14 Sharpe ratios of major funds in past three years (as of December-end 2020)

Fund name3

Gl oba l Roboti cs Equi ty Fund (Semi -a nnua lSettl ement Type)Ni kko Tri pl e Fund (Property Bond Equi ty)
Monthl y Di vi dend Pa yment TypeSma rt Fi ve (Monthl y Settl ement Type)

4

Ni kko La Sa l l e Gl oba l REIT Fund (Monthl y Di v

5

Gl oba l Fi ntech Equi ty Fund

1
2

6
7
8

Ni kko Devel oped Countri es Hi gh Yi el di ng
Bond Open (Monthl y Di vi dend Pa yment
Type)Ja pa n Roboti cs Equi ty Fund (Annua lSettl ement Type)Ni kko GW7 Eggs

11

Ni kko Fi ve Conti nents Bond Fund (Monthl y
Di vi dend Pa yment Type)
Shenzhen Innova ti on Equi ty Fund (Annua lSettl ement Type)Gol d Fund Currency Hedge (for SMA)

12

Ni kko Ja pa n Open

9
10

13
14
15
16

Grea ter Chi na Equi ty Fund (Monthl y
Di vi dend Pa yment Type）
Ni kko Worl d Tri pl e Fund (Property Bond
Equi ty) Monthl y Di vi dend Pa yment TypeNi kko AMP Gl oba l REIT Fund Monthl y
Di vi dend Pa yment Type A (No Hedge)
Ni kko Profi t Return Growth Stock OpenＡ
Ｂ
Ａ/Ｂ
Dec-20
AUM
Launch date Excess Return Standard Sharpe（Annualized） Deviation Ratio(JPY 100M)
3,775
Aug-1514.21%
22.07%
0.64
3,621

Aug-03

4.88%

10.11%

0.48

3,599
3,103
2,611
962

Jul-13Mar-04
Dec-16
Aug-031.57%
0.44%
31.40%
0.99%

4.72%
19.77%
26.33%
5.93%

0.33
0.02
1.19
0.17

542

Jan-16

9.23%

19.23%

0.48

507
486

Feb-03Jun-06

4.04%
1.68%

12.89%
4.62%

0.31
0.36

468

Nov-1720.28%

28.83%

0.70

390
371
362

Sep-17
Aug-98Oct-1010.18%
6.40%
6.80%

12.05%
18.19%
21.85%

0.84
0.35
0.31

313

Sep-05

3.33%

10.58%

0.31

294

Jan-042.30%

18.23%

0.13

289

Jun-91

8.71%

18.91%

0.46

Note: LIBOR1M was used for the risk-free rate.

16

1.1.15 Sharpe ratios of major funds in past one year (as of December-end 2020)

Dec-20Fund name
1
2
3
4
5
6
7
8
9
10
11
12

Gl oba l Pros pecti ve Fund
Gl oba l Roboti cs Equi ty Fund (Semi -a nnua lSettl ement Type)Ni kko Tri pl e Fund (Property Bond Equi ty)
Monthl y Di vi dend Pa yment TypeSma rt Fi ve (Monthl y Settl ement Type)Ni kko La Sa l l e Gl oba l REIT Fund (Monthl y
Di vi dend Pa yment Type)Gl oba l Three Ti mes Tri pl e Fund (Annua lSettl ement Type)Gl oba l Fi ntech Equi ty Fund
Gl oba l Al l Bi o Genome Equi ty Fund
(Annua l Settl ement Type)Ni kko Devel oped Countri es Hi gh Yi el di ng
Bond Open (Monthl y Di vi dend Pa yment
Type)Gl oba l Mobi l i ty Servi ce Equi ty Fund
(Annua l Settl ement Type)Ja pa n Roboti cs Equi ty Fund (Annua lSettl ement Type)Ni kko GW7 Eggs

15

Ni kko Fi ve Conti nents Bond Fund (Monthl y
Di vi dend Pa yment Type)
Shenzhen Innova ti on Equi ty Fund (Annua lSettl ement Type)Gol d Fund Currency Hedge (for SMA)

16

Ni kko Ja pa n Open

13
14

19

Grea ter Chi na Equi ty Fund (Monthl y
Di vi dend Pa yment Type）
Ni kko Worl d Tri pl e Fund (Property Bond
Equi ty) Monthl y Di vi dend Pa yment TypeNi kko AMP Gl oba l REIT Fund Monthl y20

Ni kko Profi t Return Growth Stock Open

17
18

AUM
(JPY 100M)

Ａ

Ｂ

Ａ/Ｂ

ExcessStandard Sharpe
Launch date
ReturnDeviation Ratio（Annualized）

8,192
3,775

Jun-19Aug-1590.05%
28.23%

33.89%
23.60%

2.66
1.20

3,621

Aug-03

3.34%

14.46%

0.23

3,599
3,103

Jul-13Mar-04-0.32%-10.25%

6.39%
28.47%

-0.05
-0.36

2,848

Oct-188.81%

22.19%

0.40

2,611
1,039

Dec-16
Jan-1966.53%
68.70%

30.31%
22.88%

2.20
3.00

962

Aug-03

4.11%

7.93%

0.52

560

Jan-1862.63%

26.34%

2.38

542

Jan-1624.78%

22.79%

1.09

507
486

Feb-03Jun-06

7.45%
3.61%

16.63%
4.60%

0.45
0.79

468

Nov-1753.93%

32.55%

1.66

390
371
362

Sep-17
Aug-98Oct-1021.17%
17.90%
18.60%

13.88%
21.24%
21.50%

1.53
0.84
0.87

313

Sep-050.76%

14.98%

0.05

294
289

Jan-04Jun-91-7.15%
19.48%

25.22%
23.73%-0.28
0.82

Note: LIBOR1M was used for the risk-free rate.

17

1.1.16 Investor returns of major funds (periods since launch)

Fund name
1 Global Prospective Fund
Global Robotics Equity Fund (Semi-annual
2
Settlement Type)Nikko Triple Fund (Property Bond Equity) Monthly
3
Dividend Payment Type
4 Smart Five (Monthly Settlement Type)Nikko LaSalle Global REIT Fund (Monthly Dividend
5
Payment Type)
Global Three Times Triple Fund (Annual Settlement
6Type)
7 Global Fintech Equity Fund
Global All Bio Genome Equity Fund (Annual Settlement
8
Type)
Nikko Developed Countries High Yielding Bond
9Open (Monthly Dividend Payment Type)
Global Mobility Service Equity Fund (Annual
10
Settlement Type)Japan Robotics Equity Fund (Annual Settlement
11Type)
12 Nikko GW7 Eggs
Nikko Five Continents Bond Fund (Monthly
13
Dividend Payment Type)
Shenzhen Innovation Equity Fund (Annual
14
Settlement Type)
15 Gold Fund Currency Hedge (for SMA)
16 Nikko Japan OpenGreater China Equity Fund (Monthly Dividend
17
Payment Type）
Nikko World Triple Fund (Property Bond Equity)
18
Monthly Dividend Payment TypeNikko AMP Global REIT Fund Monthly Dividend
19
Payment Type A (No Hedge)
20 Nikko Profit Return Growth Stock Open

Investor Return（Annualized）

NAV Return（Annualized）

99.92%

82.72%

12.76%

15.70%

1.31%

5.07%

2.98%

3.71%

8.82%

3.77%

7.16%

15.12%

29.56%

35.09%

40.70%

50.76%

3.38%

3.89%

18.48%

22.42%

9.06%

13.91%

0.56%

5.94%

0.19%

2.95%

9.96%

17.51%

11.69%-3.65%

9.33%
3.69%

1.66%

6.61%

-4.46%

4.02%

7.72%

5.40%

-24.76%12.93%

Note: Nikko Profit Return Growth Stock Open starts from September-end 2010 because of issues with acquiring past data.

18

1.1.17 Information provision under Nikko AM Academy brand

Main investment information sources provided as series Frequency
Additional information
Rakuyomi
Twice weekly 110 released in 2020
KoyomiMonthly
GokuyomiMonthly
Market 5 Minutes
Monthly
Weekly Market
WeeklyData Watch
WeeklyFollow-up Memo
Irregular
9 released in 2020
Global REIT Weekly
WeeklyMonthly Market
Monthly
JAPAN in Motion
Monthly
GLOBAL EQUITY OVERVIEW
Quarterly
Nikko AM Newsletter
Irregular
2 released in 2020
CHINA INSIGHT
Irregular
20 released in 2020
KAMIYAMA Reports
Irregular
26 released in 2020
KAMIYAMA Seconds!
Irregular
43 released in 2020
Why should we invest?
Irregular
1 released in 2020
Robotics Report
Twice monthly
FinTech Report
Twice monthly
What Nikko AM wants you to know about healthy
Irregular
3 released in 2020
money management

1.1.18 Number of seminars held
(Unit: number held)

For distributor salespeople

For retail investors

8,000
6,000

5,974

5,594

5,325

5,633

6,155

4,000
2,000
0

2,155

2,161

1,560

2,753

2,213
1,464

87
FY2015FY2016FY2017FY2018FY2019FY2020
Apr-Dec19

Although the COVID-19 pandemic made holding traditional face-to-face seminars difficult throughout most of 2020, we acted
ahead of industry competitors by quickly implementing initiatives such as the ones mentioned below. Our customers highly
rated our ability to provide ongoing customer support–including supporting distributor salespeople and releasing market
information for retail investors through distributors–despite the difficult circumstances.
Working with distributors and others under COVID-19
We quickly established the framework needed to handle events remotely during the pandemic by setting up the technology for
digital seminars and training sessions as soon as possible. This enabled us to provide customer support without face-to-facemeetings. We were also able to help distributor salespeople in their efforts to provide retail customers with follow-up services,
product explanations and the latest market information by supplying them with information quickly, accurately and concisely
through a wide range of media.
Relative numbers of face-to-face and remote seminars/training sessions in April-December 2020

face-to-faceremote

300

263

285

248

250

239

221
194

188

200

150

150

100

69

212

225
182

147
89

79

41

50

8
0

2020/42020/52020/62020/72020/82020/92020/102020/112020/12

As a result of our active promotion of remote seminars and training sessions, face-to-face and non-face-to-face follow-up system
has been built since April 2020 which ensured safety and solved the issue of locational restriction.

20

1.1.19 Number of fund awards won

25
20
15
10
5
0

24
15

17

14

15
7

FY2015FY2016FY2017FY2018FY2019FY2020
Apr-Dec

We work constantly to develop products that serve the interests of our customers. In FY 2020 (April to December 2020), external assessment institutions recognized
us with awards for seven of our funds: two of our foreign equity funds, three of our foreign bond funds and two of our balanced funds.
* Aggregation of awards from R&I Fund Awards, Fund of the Year (Morning Star) and Lipper Fund Awards.

1.2

Activities for corporate clients

Number of accounts utilizing risk management tool for institutional investors

110
100
90
80
70
60
50
40
30
20
10
0

94

89

89

End-Dec 2019

End-Dec 2020

19

End-Dec 2017

End-Dec 2018

Our starting point for institutional investors is to find out our customers' needs, and to work hard to meet those needs. In oursales activities, we then propose products in line with each customer's level of risk tolerance. As a part of these efforts, in
December 2017 we launched a tool in order to help our corporate investor customers improve their risk management. As of
December-end 2020, the support tool was being used for 89 accounts.

2.

Stewardship Activities

We believe that it is one of our key responsibilities as an asset manager to help the companies in which we invest to improve the21value they offer to investors by vigorously pursuing our stewardship activities, including the exercise of voting rights. We constantly
work to ensure that our activities are sustained and steadily improved upon. At the same time, we proactively incorporate theconcept of ESG into our investment management processes and perform assessments of the corporate value of firms—including
their non-financial information—in order to promote medium- and long-term improvements as well as sustainable growth, andthis approach is useful in our investment decision-making process. We also work through our ESG Global Steering Committee tofurther expand the global reach of our ESG efforts. Comprised of leaders in our investment management operations in Japan andoverseas, the committee deliberates over matters such as ESG initiatives, ways of putting them into practice, and new approaches.
Our initiatives and results to date in the above-mentioned areas are as follows.
2.1

Engagement results

No. of firms

Engagement instances

5,000
4,000

3,482

3,000

0

3,939

4,046
3,525

2,656

2,000
1,000

3,903

957

FY2015

1,433

1,051

FY2016FY2017

1,459

1,374

FY2018FY20191,107

FY2020
Apr-Dec

Our fund managers and analysts have always been proactively involved in engagement and proxy voting in order to help firms inwhich our active strategies invest improve their corporate value. We have worked since 2013 to boost the corporate value of awide range of firms, including their ESG levels, by assigning CSV scores (a way of giving firms comprehensive assessments that
include ESG scores). Since then we have assessed over 600 firms with a focus on helping them to achieve sustainable growth andenhance their corporate values in the medium to long term. In March 2017, we launched a body devoted to promoting better
corporate and shareholder value for Japanese names (approximately 2,200 firms) in which we invest, including in our passive
strategies.
These initiatives have further improved our ability to engage with firms and exercise our voting rights in order to help maximize
the corporate value of firms. In 2020 (April to December) we engaged with1,107 firms, and in the same period the number of
instances of engagement we had was 3,525.

22

2.2

Voting track record

Company-generated proposals (July 2019– June 2020)
Proposal

Yea

Nay

Subtotal

Nay ratio

Election/dismissal of directors

15,192

2,191

17,383

12.6%(Reference) Number of companies

1,400

746

2,146

34.8%

Election/dismissal of corporate auditors

2,235

203

2,438

8.3%

(Reference) Number of companies

953

169

1,122

15.1%

Selection of accounting auditors

57

0

57

0.0%

Executive remuneration

713

76

789

9.6%

Retirement benefit payments

58

86

144

59.7%

Appropriation of surpluses

1,416

71

1,487

4.8%

Restructuring

48

1

49

2.0%

Introduction, update, abolition of takeover
defense measures

0

94

94

100.0%

Other proposals on capital policy

56

4

510

6.7%

Partial revision to articles of incorporation

478

32

510

6.3%

Other

1

0

1

0.0%

Total

20,257

2,758

23,01212.0%

Proposal on company

Proposal on executive remuneration

Proposal on capital policy(Except proposals concerning thearticles of incorporation)

23

Shareholder proposals (July 2019 – June 2020)
Proposal

Yea

Nay

Subtotal

Nay ratio

Election/dismissal of directors

9

93

102

8.8%

(Reference) Number of companies

5

20

25

20.0%

Election/dismissal of corporate auditors

6

3

9

66.7%

(Reference) Number of companies

1

1

2

50.0%

Selection of accounting auditors

0

0

0

0.0%

Executive remuneration

0

3

3

0.0%

Retirement benefit payments

0

0

0

0.0%

Appropriation of surpluses

2

7

9

22.2%

Restructuring

0

1

1

0.0%

Introduction, update, abolition of
takeover defense measures

2

0

2

100.0%

Other proposals on capital policy

1

5

6

16.7%

Partial revision to articles of incorporation

1

128

129

0.8%

Other

0

0

0

0.0%

Total

21

240

261

8.0%

Proposal on company

Proposal on executive remuneration

Proposal on capital policy(Except proposals concerning thearticles of incorporation)

It is our responsibility as an institutional investor to help the companies we invest in to improve their value and grow sustainably
through our stewardship activities, including the exercise of voting rights. In addition, we understand the importance ofstrengthening our own governance and increasing transparency for those outside the company. With this in mind, we establishedthe Stewardship and Voting Rights Policy Oversight Committee in June 2016. Not only is the committee’s chairperson an outside
officer, but the majority of its members are from outside Nikko AM, thus ensuring its independence. The committee holds quarterly
meetings at which it decides Nikko AM’s policy for the exercise of voting rights from a neutral standpoint, monitors our exercise of
voting rights as one of its oversight responsibilities, and provides other forms of guidance.
In May 2020, we publicly clarified Nikko AM’s near-term policy on exercising voting rights on Japanese equities in light of the COVID19 pandemic. We also announced initiatives such as our promotion of more flexible proxy voting based on sustainability
considerations and our establishment of a contact for addressing inquiries to investee firms in order to have closer engagementwith them.
2.3

ESG initiatives

Since launching the Nikko Eco Fund in 1999, which invests in environmentally friendly firms and is Japan’s first Socially
Responsible Investment (“SRI”) fund*, we have incorporated ESG factors in all of our investment management processes based on
our understanding that they contribute to medium- and long-term corporate value. We also constantly introduce new initiatives
in order to put our EGS activities into practice more effectively. Since August 2013, we have been applying the principle of
Creating Shared Value (“CSV”; the practice of creating value for society and firms by aligning efforts to solve societal issues withcorporate interests and pursuing both goals simultaneously) by having our analysts formulate unique CSV scores that incorporate

24comprehensive assessments of firms’ financial standings, market competitiveness levels and ESG initiatives, and use them in theirstock selections. We currently formulate scores for 600 stocks listed on the Tokyo Stock Exchange from a medium- to long-term
perspective. We have already built up a track record of over six years of assessment and engagement based on our analysts’ close
engagement with the 600 firms whose CSV scores we assess and their daily work to improve corporate value including ESG.
* Socially Responsible Investment (“SRI”) is an approach to investing in firms that takes into account assessments of investees’ environmental and social initiatives(responsibilities and contributions) in addition to traditional investment criteria (firms’ economic strengths).

Our other initiatives are as described below.
Principles of Responsible Investing (PRI) ratings from assessment institutions
2020

2019

2018

Strategy and governance

A+

A+

A+

Listed stocks – initiatives on ESG issues

A+

A+

A+

Engagement

A+

A+

A+

Exercise of voting rights

A+

A+

A+

Fixed income – Government etc.

A+

A+

A+

Corporate Fixed income – Financial

A+

A+

A+

Corporate Fixed income – Non-financial

A+

A+

A+

Listed stocks – active ownership

Funds focused on Socially Responsible Investing (SRI)
Investment target

Fund name

Japanese Equity

Nikko Eco Fund74

Nikko DC Eco Fund

8

Nikko World Bank Bond Fund (Monthly Dividend Payment Type)115

SMBC Nikko World Bank Bond Fund

17

World Bank Green Bond Fund

22

Foreign BondAUM (JPY 100M)

We have been a signatory to the United Nations’ Principles for Responsible Investment (PRI) since 2007. Our pioneering approachas an investment manager demonstrates our commitment to contributing to medium- and long-term corporate value andsustainable responsible investment. We have consistently been awarded the top assessment level (A+, out of six levels from A+ toE) for the main assessment items, including our approach to responsible investment. In the 2020 Assessment Report, we received
the top score of A+ for strategy and governance, which is an assessment of firms’ company-wide ESG capabilities, and all items
regarding in-house management. It was the seventh straight year for us to achieve the top level for strategy and governance. In
annual PRI assessments, the PRI secretariat assesses the extent to which signatory institutional investors are practicing responsible
investment. One of six assessment levels (A+, A, B, C, D or E) is then awarded, with A+ being the highest assessment.
Since launching a body specialized in this area in March 2017, we have expanded the number of firms whose ESG we research fromthe previous number of about 950 (active strategy investment universes) to 2,200 by adding firms in which our passive strategies
invest to the scope of our research.

25

3.

ESG Initiatives as a Firm

As an asset manager engaged in ESG initiatives directed at investee companies, we also believe in the importance of implementing
our own ESG activities as a firm.
3.1

GovernanceOur role as an asset manager is not only to seek improvements in the governance of investee companies but to continuously
ensure that our own governance is at a world-class level. To achieve this, we work on the three governance areas shown below.
3.1.1

Management governanceOur governance framework is distinctive in the Japanese asset management industry for its extremely high levels of
independence and transparency. Specifically, our Board of Directors is chaired by an outside director, and as of December-end
2020, 7 of its10 members are outside directors, five of whom are independent directors with no capital relationship with Nikko
AM.
In June 2019, we transformed Nikko AM into a company with an Audit and Supervisory Board in order to strengthen the auditing
and supervision of our Board of Directors, to further enhance our corporate governance framework and to boost our corporate
value. The transition has enabled us to incorporate monitoring-board-style governance in our management, to separate
management monitoring from business execution more clearly, and to speed up management decision-making.
3.1.2

Voting rights governanceWe established the Stewardship and Voting Rights Policy Oversight Committee in June 2016 as a way of improving transparency
in our stewardship activities such as engaging with firms and exercising voting rights as well as strengthening our governance.
Drawing the majority of its members from outside the company, the committee is the first such third-party body to beestablished at a Japanese asset management company. It holds meetings once a quarter in principle and provides a venue foroutside committee members to have lively discussions on how Nikko AM exercises its voting rights. The committee has held atotal of 23 meetings so far (five meetings in 2020). Please refer to the Appendix (PDF) for details of its activities.
3.1.3

Fund governanceWe established the Fund Advisory Board, whose members are also mostly from outside Nikko AM, in September 2017. The Fund
Advisory Board meets every quarter in principle. The board has met a total of ten times so far and its outside members
participate in debates at its meetings (three meetings in 2020). Please refer to the Appendix (PDF) for details of its activities.
3.2

Environmental

We strive to contribute to a sustainable environment through eco-friendly offices, employee-led eco-initiatives, and theminimization of our carbon footprint.
•

Achievement of Carbon-neutral Operations

Based on an assessment of the carbon dioxide emissions of our Tokyo, Singapore, Hong Kong, Sydney, Auckland, New York,
London and Edinburgh offices for our operations since 2018, we offset our emissions by contributing funds to projects for the
reduction of an equal amount of carbon dioxide emissions, earning us certification as a “carbon-neutral company”.
•

Internal education on environmental issues

We are also receiving an increasing number of requests from customers, particularly from outside Japan, about our sustainability
initiatives as an asset manager. Although our industry has a lower environmental impact than other industries, we support the Task
Force and Climate-related Financial Disclosures, and believe that it is important to raise awareness about climate change and otherenvironmental issues. We do so by inviting experts from NPOs and NGOs several times a year to educate our employees about such
issues through talks on related themes.

26

3.3

SocialWe strive to enhance social causes, both within the company by supporting a diverse and inclusive environment, and outside of
the company through hands-on initiatives and charitable donations.
•

Women's GroupNikko AM was the first Japanese Asset Manager to be a signatory to the UN Women’s Empowerment Principles. In all our offices inJapan and around the world, we strive to provide an environment in which all people can work comfortably by deepening ourunderstanding of and respect for our workforce’s diversity.
•

LGBT

Nikko AM is an official member of “LGBT Finance”, an organization set up by financial institutions in Japan to support LGBT
people. We are highly committed to this initiative, which has both very visible grass-roots support from our employees and very
engaged sponsorship from our senior management. We also work to promote awareness of LGBT causes.
•

People with disabilities

Our working group for people with disabilities helps to provide a pleasant working environment for employees living withdisabilities. Through its activities, the group works to enhance employees’ understanding of each other’s needs, considers ways toenhance the workplace, and encourages cross-departmental cooperation to improve the working environment as much as possible.
•

Charitable Donations and Activities

We participate in charitable and philanthropic activities on a firm-wide basis. Although we were unable to participate in as many
volunteer activities as usual in 2020 owing to COVID-19, we gave our employees opportunities to make charitable donations. Our
donation activities covered a wide range of causes around the world, and we paid particular attention to contributions to lowincome groups given the particularly strong impact the pandemic had on such members of society.

In conclusion
Throughout the many changes we have experienced—including changes in the business environment, technological innovations,and growth in financial products—we have consistently striven to act in the best interests of our customers. We strongly believethat continuing to do so is our mission as a firm.
The emergence and global spread of COVID-19 made 2020 a year in which society as a whole and all of our lifestyles went throughgreat changes, and we were forced to transform the way we think about many different aspects of life. We are sure that all of us–
including our clients–will continue to face a challenging environment going forward. At Nikko AM, we have been given an evenkeener awareness of the importance of adapting to different environments by continuing to give clients ways to carry on building
their assets as well as enabling them to continue investing for their long-term goals regardless of short-term turmoil in the market.
We will continue to ensure that Nikko AM earns the trust of customers and attracts praise for its performance by fostering
investment management innovation, developing products that fully serve the interests of customers, and strengthening ourcorporate governance.

27