Have any foreign asset managers launched successful products in Japan? In this snapshot series, we profile three toshin fund successes. The second one is "Shinko US-REIT Open (Zeus)".

2. Shinko US-REIT Open ("Zeus")

Among Japan's toshin funds, (similar to mutual funds in the U.S.), several foreign asset management companies have found success operating as sub-advisors. The Zeus fund is a typical example.

Zeus was created and managed by Shinko Asset Management (which merged into Asset Management One in 2016). While considered a fully Japanese toshin fund, actual investments in US-REITs are handled by Invesco Advisors Inc., a major asset manager based in Atlanta. Strong collaboration, among other factors, between the companies in Japan and the U.S. helped make Zeus a solid toshin hit.


Created in 2004, Zeus was fairly small potatoes in its early years. Only three distributors sold the fund in a market dominated by dividend-paying sovereign bond funds. Although the J-REIT (Japanese REIT) market had operated since 2001, individual investors in Japan showed little interest.

The financial crisis of 2008 changed the market for toshin. Dividends from sovereign bond funds fell and individual investors moved to relatively higher dividend funds, such as US-REITs and the so-called "currency-selection" products. The latter includes various investment schemes in high-yield and emerging market bonds that maximize returns by managing fluctuation in currency values.


As investor focus shifted toward the US-REIT market, Shinko stepped up its promotion of the Zeus fund by raising the dividend per 10,000 units from 60 yen to 90 yen in 2010. Since then, more and more distributors, including major banks, have sold Zeus and its AUM reached 700 billion yen in 2011. Zeus also benefited when Japan's Financial Services Agency moved to beef up monitoring of individual-investor funds. Providers of currency-selection toshin funds would now be required to clarify their explanation of risks. Zeus and other US-REIT funds became easier for individual investors to understand.

In 2012, however, Shinko stumbled by lowering Zeus's dividend to 75 yen. To fend off panic, the company's marketing team met with nearly every seller of the fund across the country to explain. The move was due not to worsening performance of US-REITs, but to reinvestment that would carry the fund in the long term. Shinko's pre-emptive move paid off; Zeus added distributors and in 2015-2016 AUM topped one trillion yen.


Invesco, which has kept a low profile in Zeus's marketing, has proved itself in REIT investment. The company enjoys one of the highest reputations among competitive US-REIT funds in Japan. With the toshin fund selling well, Invesco is known even in smaller Japanese locales.

Today, Zeus AUM hovers around 645 billion yen (as of mid-November 2018) and the fund is sold at 59 broker-dealers and 117 banks. Industry commentators attribute the fund's success to the strong partnership between asset management companies in Japan and the U.S. and to the network of distributors throughout Japan.