Sun, Aug 30, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Japanese firms are increasingly awarding investment mandates to foreign managers

Monday, January 27, 2014
Opalesque Industry Update - Myriad changes--macro and micro--support a Japanese institutional move to award mandates to foreign managers. Sub-advised funds accounted for 65% of investment trust assets under management at June 30, 2013, up from 61% in 2008, according a joint report from Cerulli Associates and Nomura Research Institute, Ltd (NRI) entitled Asset Management in Japan 2013: Opportunities and Challenges for Foreign Managers.

The report is the inaugural result of the collaboration by Cerulli Associates, a global analytics firm specializing in asset management and distribution trends, and NRI, a leading provider of consulting services and system solutions.

Sub-advisory arrangements can take two basic forms, either in a discretionary mandate (¥12.4 trillion, US$126.5 billion, as of June 30, 2013), or a fund of funds brief (¥15.0 trillion). Hybrid arrangements account for another ¥12.1 trillion assets under management (AUM). The sub-advisory market offers ample opportunities for foreign managers, particularly in areas like foreign equity and foreign real estate investment trusts where sub-advised funds account for more than 90% of AUM.

"Gradual diversification of Japanese banks' portfolios from Japanese Government Bond (JGB) to foreign securities and changes to pension fund governance spell greater opportunities for foreign managers," said Yoon Ng, Asia Research Director at Cerulli Associates. "The strongest interest for advisory products will come from asset classes like foreign fixed income and foreign equity, followed by emerging markets.”

"Foreign managers wanting to break into the Japanese market as a sub-advisor should target their sales activities at major investment trust companies as well as pension funds," said Sadayuki Horie, Senior Researcher at NRI. "Pension funds have started increasing their use of foreign managers, even for those without a local physical presence. It is crucial for foreign managers to ensure that these institutions are aware of where their expertise lies as they are on the lookout for distinctive asset managers from around the world.”

Key observations from the report on the Japanese investor landscape include:

- Japan's pension funds are the country's largest institutional investor bloc with total assets of ¥277 trillion, as of March 31, 2013.
- Financial institutions' securities holdings, which totaled ¥823 trillion as of March 31, 2013, were predominantly domestic government bonds.
- Changes to securities taxation will encourage growth in the investing class, increasing demand for new products and outsourcing opportunities.
- Foreign asset managers must comply with highly idiosyncratic Japanese business processes and provide superior service to their clients.
- As Japanese asset managers are increasingly outsourcing back-office functions to cut costs, foreign managers that embrace business process outsourcing (BPO) are better positioned to win new business.
- The reform plan of the Government Pension Investment Fund could have substantial impact on public pension fund business and increase demand for high alpha products & alternative investment products.

Press release

www.cerulli.com

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Hedge funds suddenly find real money is back in Argentina's debt, Elon Musk buys more SolarCity stock following hedge fund manager short, BlackRock plans to get into rental-home financing[more]

    Hedge funds suddenly find real money is back in Argentina's debt From Bloomberg.com: The real money is back in Argentina. Before the country’s default in July 2014 (its second in 13 years), most long-term investors abandoned its bond market. As they rushed out, Argentina became a favorit

  2. Activist News - Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping, Meet Europe's best activist investor[more]

    Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping From Businessinsider.com: Carl Icahn has picked his next target: Freeport-McMoRan. Icahn and a group of other investors have snapped up an 8.46% stake in mining company Freeport-McMoRan, according to a j

  3. North America - Hedge fund manager Ray Dalio’s challenge to the Fed[more]

    From Newyorker.com: For some reason, Janet Yellen, the chair of the Federal Reserve, decided to skip this year’s annual Fed conference in Jackson Hole, where monetary policymakers from the United States and abroad get together with some prominent academics to discuss the big issues of the moment. Th

  4. Opalesque Exclusive: Credit-focused hedge fund Numen Capital expects more volatility in Europe in coming months[more]

    Benedicte Gravrand, Opalesque Geneva: A London-based hedge fund, which has just hired two emerging managers, is cautious on Europe. Vassilis Paschopoulos and former Lehman’s colleague Nikos Kargadouris, launched a London-based credit-focused hedge fund called

  5. Performance - Hedge funds bruised by stocks’ meltdown, Capstone’s volatility hedge fund is having a monster month thanks to market mayhem[more]

    Hedge funds bruised by stocks’ meltdown From WSJ.com: Hedge-fund managers like to promise their investors protection from market swings. In the recent stock swoon, many were caught off guard. Billionaire managers such as Leon Cooperman, Raymond Dalio and Daniel Loeb are deeply in the red

 

banner