Chase Manhattan Corp. is jumping into the mutual fund business in Japan.

The banking company has formed an alliance with Sumitomo Trust & Banking Co. to jointly develop U.S. dollar-denominated funds.

The funds, which will consist of high-grade U.S. bonds, are to be sold through Sumitomo Trust branches but managed by Chase. The Japanese bank said it plans to sell the funds through its 57 branches nationwide, and the minimum investment will be $3,000.

Sumitomo Trust will also sell funds developed by Credit Suisse AG, Morgan Stanley & Co., Daiwa Securities Co., and Nomura Securities Co., as well as funds managed by Pictet Asset Management (Japan) Ltd. and Fidelity Investments.

The move makes Chase the third U.S. commercial banking company to enter the mutual funds business in Japan, after Citigroup and Bankers Trust Corp. Chase's initiative came despite doubts that Japan will soon emerge from its economic recession and despite the well-known reluctance among Japanese savers to invest in mutual funds.

Takashi Hashimoto, managing director in charge of strategic planning in Japan for Chase's asset management division, said the alliance is part of a long-term plan by the company to expand retail fund sales in the Japanese market.

"We believe this is a good time to establish a position in the marketplace, even if in the short term we don't expect a dramatic increase in sales of these products," Mr. Hashimoto said.

Under financial market deregulation recently approved by the Japanese government, banks will be allowed to sell mutual funds as of Dec. 1.

Previously, only brokerage firms were allowed to sell retail investment funds. As a result, U.S. institutions such as Fidelity Investments, Merrill Lynch & Co., and Goldman, Sachs & Co. are gearing up to enter the Japanese market.

Though Chase already offers institutional asset management services in Japan, it has until now stayed out of the retail market.

Mr. Hashimoto said Chase is also hoping to sell its own Vista mutual funds in Japan through Japanese banks and brokerage firms and that it is looking at other opportunities with other Japanese financial institutions.

He added that even if sales of mutual funds have been slow to take off they are likely to speed up eventually.

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