TOKYO — Despite anemic growth in the Japanese asset management market, non-Japanese firms have managed to grab more than 26% of the business by penetrating the corporate pension fund market and snatching up subadvisory mandates, according to a new report by Cerulli Associates.
That is a 10-point gain from the 16% market share for non-Japanese firms in 2000, according to Cerulli's Japanese Market Profile 2005. The market profile provides an update of the Japanese asset management market and performance projections through 2008.
The report found non-Japanese firms are luring corporate pension clients with global bond strategies that deliver attractive yields and look especially good in an environment of near-zero interest rates. Few domestic management firms have explored such options, which has given the non-Japanese players a competitive advantage, said Itsuko Hatanaka, an analyst in Cerulli's Tokyo office.
But the Cerulli report was negative about the Japanese asset management market's overall health.
In March, the Japanese asset management marketplace amounted to %A5;147 trillion ($1.33 trillion), and is expected to grow just 4% each year through 2008, according to Cerulli. That is only half of the growth rate expected from the global fund management marketplace in the same period.
Growth prospects are gloomy, according to the Cerulli report, because of sluggish interest rates and an industry encumbered with outdated rules and regulations.
"Insufficient deregulation in some new (retirement) schemes has impeded rapid expansion of the market," said Ms. Hatanaka. The Japanese defined contribution market, for instance, has evolved very slowly, compared with the U.S., because of low monthly contribution rates and restrictions on transferring assets from existing pension plans.
There were a few growth prospects on the domestic front, however. Assets for the variable annuity market have swelled by just less than 40% in one year, thanks to features that protect assets from heavy inheritance tax levies.
