Chase Manhattan Corp. is the latest U.S. firm to eye Japan as a new frontier for mutual fund distribution.
The nation's largest bank is getting ready to ask Japan's Ministry of Finance for permission to market its proprietary mutual funds there, said William A. Semmes, international officer for Chase's Vista Funds. The bank hopes to begin a Japanese marketing initiative by the end of the year, initially concentrating on marketing its funds to pension fund managers, he said.
"Our philosophy is to be where we can," Mr. Semmes said in a telephone interview from his London base. As more Asian countries loosen their banking regulations to let in foreign firms, Chase will explore marketing its Vista Funds in those markets as well, he said.
Chase is registered to sell its funds in Hong Kong and is exploring opportunities in Korea, the Philippines, and Indonesia, he said.
Bankers Trust New York Corp. late last year became the first bank and third U.S. company to gain approval to sell mutual funds in Japan, a traditionally inaccessible market. Fidelity Investments and Morgan Stanley & Co. received approval in 1995 to distribute their funds there.
Japanese banking laws loosened in April 1995 to allow approved foreign firms to distribute their mutual funds there. The recent trend among Japanese pension managers to move into equities and away from the safe low- yield Japanese government bonds could initiate a wave of Japanese money flowing into foreign funds, industry observers say.
Japan's pension market is a good place to start, Mr. Semmes said. As investors become familiar with Chase's products and service, they are more likely to invest with the bank on their own, he added.
But one industry observer said the Japanese market is a tough one to crack, even by a company with name recognition.
"It's a relatively closed marketplace, and I would suggest the mind-set of the locals is relatively closed," said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I.
Without a joint venture with one of the large Japanese banks, foreign firms face an uphill battle, he added.
Fidelity Investments, Boston, has distributed its yen-denominated funds, known in Japan as mutual trusts, through the Japanese brokerage Nomura Securities Ltd. since November 1995. The largest U.S. fund company, Fidelity has had investment management offices in Japan since 1969.
The firm received approval to sell its funds in Japan in November 1995 and is exploring selling its funds directly to Japanese investors, the spokeswoman said.
Having an existing presence in Japan will help any U.S. firm that hopes to do business there, an industry consultant said.
Large U.S. banks with custodial business in Asia could "put two and two together" and offer investments to their custodial clients, said Tom Cote, a San Francisco-based consultant. Chase, for one, has custodial operations in Japan.
Bankers Trust manages $8 billion in institutional assets in Japan, a company spokesman said last month. The bank will soon begin selling its mutual funds there.
Mr. Cote says the Japanese market is a potentially lucrative one for U.S. firms.
"The Japanese are resilient," he said. "If they can't make money at home, they'll look elsewhere."
