GPIF’s Mizuno Makes Bold AI, ESG Predictions

In an interview with Bloomberg, Hiromichi Mizuno, CIO of Japan’s $1.37 trillion Government Pension Investment Fund (GPIF), expressed his thoughts on the future of technology and ESG investing. While some of his insights were those CIOs could agree with, the timeframe may surprise them.

When asked about changes he expects in the next five to 10 years, Mizuno expects the “adoption of technology, including [artificial intelligence (AI)] and ESG integration into all asset classes.” He also believes AI could either “replace or enhance the asset managers’ work, particularly for short-term trading.”

“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,” he said of the implications of his prediction coming true. “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.”

While he does see a lot of jobs being cut as another implication, Mizuno also thinks it will open other opportunities for new roles.

“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,” he said.

Mizuno also noted that AI and human intelligence working together was the best opportunity overlooked by the industry, as asset managers are utilizing AI to simply replace their analysts rather than collaborate. He said this  issue was the driving factor of GPIF’s recent Sony Computer Science research partnership. The agreement sees GPIF and Sony Computer Science Laboratories study the impacts of AI on asset management to discover possibilities on how to utilize AI technologies for the fund’s long-term asset management.

“We are trying to be ahead of the curve,” he said. “When the asset management industry starts adopting that, we just want to be there to understand what’s happening.”

As for the future of ESG-themed investing, Mizuno sees it becoming irrelevant as the market begins using it for pricing in their investments.

In addition, Mizuno expressed that he wouldn’t be surprised if Google and Amazon were to become asset managers at some point due to their AI technology and data collection.

“I won’t be surprised if Google and Amazon become asset managers, but I think a lot of people in this industry will be,” he said. “I take it for almost granted that they will come into this market because they have cutting-edge AI technology and they now capture all the big data of what’s happening in the market.”