(Bloomberg)-- Hiromichi Mizuno was named chief investmentofficer of Japan’s Government Pension Investment Fund,the world’sbiggest manager of retirement savings, in 2014.

He has since led a push to increase equity holdings andadvocated for incorporating ESG, or environmental, social andgovernance, factors into investing.

Question: What are the biggest changes in the investment world you see comingin the next five to 10 years?

Mizuno: Adoption of technology, including AI and ESG integration into all asset classes.I believe artificial intelligence will be able to either replace orenhance the asset managers’ work, particularly forshort-term trading.

Q: What are the implications?

Mizuno: Asset managers have to adjust their conventionalbusiness model. Investors will be more focused on the long-terminvestment theme, as AI will take over the short-term trading. Inother words, investors will shift their focus to the long-termsustainability of their portfolio, and more focus on theirinvestment themes like ESG.

Q: Do you see a lot of jobs being cut as aresult?

Mizuno: I wouldn’t be surprised if a lot of people lose theirjobs because AI replaced their routine. But I also believe in humanwisdom. I think the long-term thinking and the ESG-likenon-numerical, non-quantitative information will continue torequire human interpretation. I believe AI will release the humanresource to do something else.

Q: What’s the future of ESG investing?

Mizuno: In the long run, “ESG-themed investment” will beirrelevant, as the whole market starts to use it for pricing intheir investments.

Q: What’s the biggest shock the industry doesn’t seecoming?

Mizuno: I won’t be surprised if Google and Amazon become assetmanagers, but I think a lot of people in this industry will be. Itake it for almost granted that they will come into this marketbecause they have cutting-edge AI technology and they now captureall the big data of what’s happening in the market.

Q: Which will ultimately prevail, active or passiveinvesting?

Mizuno: I’m hopeful for active managers, but they need to adjusttheir business model, including their cost structure. Passiveinvestment will only remain efficient if active managementcontinues to be the mainstream. Active managers failed to provethey’re worth investors’ faith because research shows that as anindustry, they didn’t add the alpha net of fees.

Q: How can businesses cope with fee pressure fromindexing and other trends?

Mizuno: Asset managers should adjust their fee structure toimprove alignment with their clients, rather than simply reducingthe fee level.

Q: What’s likely to cause the next global financialcrisis?

Mizuno: Mishandling of the reverse QE. I think people are a bittoo optimistic that central banks will be able to reverse theirquantitative easings smoothly because nobody has done it before andthis is going to be a big, big historical experiment.

Q: What’s the best opportunity the industry isoverlooking?

Mizuno: AI and human intelligence working together. So far Ihaven’t heard from asset managers that they are using AI other thanjust replacing their analysts. That’s the whole purpose of therecent Sony Computer Science research partnership. We are trying tobe ahead of the curve. When the asset-management industry startsadopting that, we just want to be there to understand what’shappening.

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