Bayview Asset Management

The Stewardship Code

Basic Policy for Fulfilling Stewardship Responsibilities

July 31, 2014

Bayview Asset Management Co., Ltd., (BVAM) has endorsed the objectives of “the Principles for Responsible Institutional Investors «Japan’s Stewardship Code»” announced by the Financial Services Agency in February 2014, and set forth its acceptance of Japan’s Stewardship Code in May 2014 for the active investment management of Japanese listed stocks in order to take responsible actions as an institutional investor engaging in investment management operations that would contribute to the sustainable growth of the investee companies.

By accepting the code, we will take actions truly appropriate in accordance with the spirit of the code, and strive to further improve and advance our efforts as a responsible institutional investor.

Principles for Responsible Institutional Investors «Japan’s Stewardship Code»

  1. Principle 1Institutional investors should have a clear policy on how they fulfill their stewardship responsibilities and publicly disclose it.
  2. Principle 2Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.
  3. Principle 3Institutional investors should monitor investee companies so that they can appropriately fulfill their stewardship responsibilities with an orientation towards the sustainable growth of the companies.
  4. Principle 4Institutional investors should seek to arrive at an understanding in common with investee companies and work to solve problems through constructive engagement with investee companies.
  5. Principle 5Institutional investors should have a clear policy on voting and disclosure of voting activity. The policy on voting should not be comprised only of a mechanical checklist; it should be designed to contribute to the sustainable growth of investee companies.
  6. Principle 6Institutional investors in principle should report periodically on how they fulfill their stewardship responsibilities, including their voting responsibilities, to their clients and beneficiaries.
  7. Principle 7To contribute positively to the sustainable growth of investee companies, institutional investors should have in-depth knowledge of the investee companies and their business environment and skills and resources needed to appropriately engage with the companies and make proper judgments in fulfilling their stewardship activities.

Our policy pertaining to Principle 1 through Principle 7 of the Japanese Stewardship Code is as follows.

Principle 1. Policy to fulfill stewardship responsibilities

BVAM is an independent boutique asset management firm (specialized asset management company) specializing in active investment mainly in Japanese and U.S. equity and multi-asset products. Our management policy, distinctive of an independent boutique, believes “Asset management = Manufacturing,” and we have focused much of our resource in the asset management related divisions to improve our expertise and maintain quality. Especially in Japanese equities investment, under our fund manager-centric policy, the individual responsible for investments is made clear and we will fulfill our stewardship responsibilities through active investments based on in-depth analysis of fundamentals.

In making fundamentals analysis, investee companies are evaluated and investment decisions are made not only from financial aspects but also non-financial aspects. Specifically, the fund managers and analysts of the asset management division conduct the comprehensive research on the investee company’s corporate strategy, governance, capital structure and risk management (including risks pertaining to social and environmental issues), etc. As they carry out their research from a medium to long-term perspective of improving the capital efficiency, enabling sustainable growth and enhancing the corporate value of the investee companies, they actively utilize opportunities including earnings result meetings, interviews with persons in charge of IR, individual meetings and small group meetings with top management, to hold dialogs with the investee companies.

Principle 2. Policy on conflicts of interests

BVAM considers the independence of management and capital to be important and has established a long-term, stable business foundation that is the cornerstone of asset management as an independent asset management firm, the stocks of which has not been offered publicly but are held entirely by its officers and employees. Therefore, there will be no conflicts of interest associated with the purchase of marketable securities issued by affiliated companies or the exercising of voting rights in affiliated companies.

As for sales and purchases of stocks, etc. by officers and employees, it is managed by setting internal rules to ensure there will be no transactions involving conflict of interests or any other inappropriate transactions with our clients and beneficiaries. In particular, we have made it mandatory that all officers and employees receive approval of the Compliance Office in advance when they trade stocks, etc., and especially for those in the division responsible for investing in Japanese and overseas shares, stock trading is prohibited as a general rule. Furthermore, in order to ensure that there will be no transactions involving conflict of interests with our clients and beneficiaries, between funds, or with sales companies, we have established an internal arrangement enabling impartial and appropriate management.

Principle 3. Understanding the situation of the investee company

BVAM, in our active investment of Japanese equities, verifies the advantages of our investee companies’ business models from the medium to long-term perspective and makes investment decisions based on whether or not a strategy that would contribute to improving the company’s corporate value is being implemented in terms of both its financial and non-financial aspects. Furthermore, upon making an investment, we strive to be able to catch any indication of change by continuously monitoring the situation of the investee company (not only its financial performance but also factors including its management strategy, financial strategy, governance and risk management structures, external environment factors, and internal environment factors) to secure its sustainable growth.

Principle 4. Constructive and “purposeful dialogs” with investee companies

BVAM holds active and continuous dialogs with investee companies as part of an essential research for in-depth fundamentals analysis aimed at improving the corporate value of the investee companies for the benefit of our clients and beneficiaries. Earnings result meetings and meetings with the management and persons in charge of IR are utilized to hold dialogs with the investee company’s management and IR department.

We believe that undisclosed material facts are not necessary for the dialogs for this purpose, and basically do not receive any undisclosed material information. If we do receive information on undisclosed material facts from companies, we will handle the matter appropriately according to our internal rules.

Principle 5. Policy on exercising voting rights and disclosure of its results

BVAM recognizes the importance of corporate governance at investee companies and considers exercising voting rights important as part of our fiduciary duty. We believe that adequately exercising our voting rights encourages companies to enhance their corporate governance system and leads to improved medium to long-term corporate value and sustainable growth.

When executing our voting rights under our responsibility and judgment, upon taking into consideration the constructive engagement with investee companies and the outcome of our daily corporate research, we have established a guideline on our “Proxy Voting Policy”. Please see the below URL for details.

Proxy Voting Policy

Principle 6. Periodical reporting to clients and beneficiaries

BVAM announces the status of exercising our voting rights by the types of proposals and the number of votes for approvals and disapprovals once every year on our website (please see the URL in Principal 5). In addition, we report, as necessary, some cases of dialogs considered as beneficial in contributing to the improvement of corporate value from a medium to long-term perspective in the reports prepared periodically, such as monthly, quarterly or semiannually, to clients and beneficiaries who require such reporting. We also take questions when we visit our clients and beneficiaries to report on quarterly performances, etc.

Principle 7. Cultivating capabilities for stewardship activities

BVAM, as a responsible institutional investor, considers not only the short-term performance of investee companies but also its non-financial information from a long-term perspective when conducting research on investee companies and in our investment process, and makes continuous efforts to deepen our understanding of the actual business situation. Furthermore, by clarifying for our clients and beneficiaries where the responsibility for the management of assets lies under our consistent management policy of “visible asset management” that is specific and coherent to our company, fund managers and analysts devote themselves to diligent studying on a daily basis, hold beneficial dialogs with a sense of constructive tension with investee companies, and strive to fulfill their stewardship responsibilities at a high standard.

Back to Top