ENTERING THE JAPANESE ASSET MANAGEMENT INDUSTRY --
What to be aware of: licenses, investment vehicles, local partnering, management fees, other players (e.g., trust banks, life insurance, consultants, etc.)

Part 3. How to enter the market?

Q.

What is 'toshin'?

A.

Toshin fund is one of the major destinations for most Japanese investors. Toshin is an abbreviation for 'toshi-shintaku', literally, investment trust. Under the Act on Investment Trusts and Investment Corporations, toshin is an investment vehicle similar to the mutual fund and closed-end fund in the US. In Japan, the word 'fund' has become a synonym for 'toshin'.

If you are thinking of selling US or other foreign funds in Japan, you should make some accommodations to Japanese investor demands. For example, Japanese investors, such as pension funds, invariably prefer funds that carry a relatively low expected return and risk. Currently, funds with a 3-5% expected rate of return outsell those with a 10% expected rate of return and higher risk.

Japanese investors have suffered currency losses due to the sharp rise in JPY value against USD, almost eliminating their investment gains. As a result, Japanese investors may require some measures for hedging against currency loss.