Japan's government is establishing a system that allows multiple national universities to pool funds for joint investments in stocks and real estate, which typically offer higher returns and risks than deposits and government bonds. Currently, like their counterparts in South Korea, national universities in Japan primarily invest in safe assets. The new initiative aims to broaden investment opportunities through collaboration among universities, particularly benefiting smaller regional institutions that lack investment expertise and resources.
According to the Nihon Keizai Shimbun (Nikkei), the government plans to implement this system for joint investments in stocks and real estate among national universities as early as the 2026 fiscal year. This initiative is part of a broader national strategy to enhance the asset management capabilities of these institutions.
Currently, national universities are generally limited to investing in safe assets such as government and local bonds, which guarantee the principal. To invest in riskier assets like stocks or real estate, they must establish a specialized committee involving external experts and adhere to ethical guidelines, requiring approval from the Minister of Education, Culture, Sports, Science and Technology. Out of 85 national universities, only about 20 are permitted to invest in risk assets.
Excluding cash and deposits, the total managed assets of national universities amount to approximately 400 billion yen (about $3.7 billion). However, there is significant disparity among institutions. Major universities like the University of Tokyo, Tohoku University, and Tokyo Institute of Technology have attracted financial professionals from the industry and actively invest in unlisted stocks. The University of Tokyo alone manages over 60 billion yen, while around 80% of national universities, particularly regional ones, have managed assets below 5 billion yen. Smaller institutions face challenges in hiring specialized staff or diversifying their investments.
The new system will focus on enabling smaller universities to collaborate with those that have extensive asset management experience. This collaboration will allow less prominent universities to invest alongside leading institutions in various products, thereby enhancing their management capabilities. To facilitate this, the Ministry of Education is reviewing amendments to the asset management standards under the National University Corporation Law.
The government's push to expand asset management among national universities is driven by increasing financial pressures. According to the Ministry of Education, the number of students entering universities, currently around 630,000, is projected to decline to about 460,000 by 2040. Approximately 30% of private universities are facing financial difficulties due to excessive debt. Additionally, rising prices are increasing maintenance and repair costs for aging buildings and research facilities. There are concerns that relying solely on safe assets like government bonds may erode the real value of these institutions' assets.
Funding from the government for operational expenses at national universities has stagnated. There is an urgent need to diversify revenue sources beyond tuition and government support. The government plans to encourage universities to use profits from asset management to bolster their operational and research funding.
Major universities in the United States and Europe utilize returns from asset management to support research and attract top talent globally. Harvard University, for instance, manages assets worth approximately $57 billion. The Japanese government aims to improve the operational conditions of regional national universities, which often lack sufficient asset size and expertise, through joint management initiatives.
* This article has been translated by AI.
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