by Noriyuki Morimoto
Institutional investors are investing entities that have a decision-making body at the top of the organization and underlying asset management teams consisting of professionals. But the decision-making body is only by name, and the actual investment decisions are made within the asset management team.
In the first place, it is impossible to make investment decisions through discussions and reaching a consensus. The decision-making body can only choose whether to approve or reject a matter that is thoroughly discussed and effectively decided by the people directly involved in asset management. And unless there is a serious flaw in the case, it is not expected to be rejected.
If there is a procedural flaw, it is natural for an institution to reject the decision, but it is not easy to decide when an investment decision should be rejected based on its content. On the other hand, rejecting a case on the grounds that it can neither be approved or denied would exclude all innovation and creativity, and the institution would fail to fulfill its responsibilities.
In short, there is no choice but to reject only what they should, when they should, based on the insights naturally required by the status as members of the institution. Through the accumulation of judgments based on such insights, socially accepted standards will become clearer over time, and conversely, it is because standards exist, rational institutional decisions can be made.
Not only in investment, but in business in general, and in society in general, the worst thing you can do is to reject a decision because you cannot make it. It is only by deciding on the undecidable that a society can evolve. Therein lies the secret of good investment.
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.