Chase Manhattan Corp. has set up an investment management unit to tap into Japan's tremendous reserve of private savings.
Tokyo-based Chase Investment Trust Management Co. said it plans to introduce a yen-denominated global fund early next year that will offer investments in non-Japanese equities, bonds, and money market instruments, said Takashi Hashimoto, director and president of the unit.
The fund will probably require a minimum investment of $500 to $1000 and will be distributed through Japanese banks and brokerage firms, he said.
Mr. Hashimoto explained that the fund is part of a broad strategy to penetrate the Japanese market.
"A lot of people believe this is one of the biggest markets left for fund managers," he said.
Chase already sells dollar-denominated, U.S.-domiciled Vista funds as well as Luxembourg-domiciled funds through New Japan Securities, a second- tier brokerage firm.
In another move, Chase has also agreed with Japanese financial companies to help structure and manage retail investment funds. Mr. Hashimoto declined to name the institutions in Japan with which Chase is holding talks to distribute the yen-denominated fund.
Chase manages $181 billion of private savings, mutual fund assets, and corporate and institutional investments worldwide. In the last two years, it has gotten licenses to sell mutual funds in France, Germany, Italy, Hong Kong, Japan, Panama, and the United Kingdom. Chase is also seeking licenses to sell mutual funds in Bahrain and Taiwan.
Since Tuesday, Japan has let its banks and insurance companies, as well as non-Japanese finance institutions, sell retail investment funds as part of a broad-based deregulation of the Japanese financial sector.
Chase set up a Japanese institutional pension fund management company, Chase Trust Bank, 10 years ago and is now one of three U.S. banking companies targeting the Japanese mutual fund market alongside such brokerages as Merrill Lynch & Co., Fidelity Investments, and Putnam Investments. The two other U.S. banks with approval to sell mutual funds in Japan are Citigroup and Bankers Trust Corp.
Japan is viewed as a promising market because only about $350 billion, or 3% to 4% of its private savings, are invested in mutual funds.
However, bankers have predicted that the Japanese market would grow significantly after a Japanese government decision to introduce 401(k)- style, defined-contribution retirement plans next year.
Hoping to take advantage of this growth, Chase is considering establishing 10 to 20 retail funds in Japan with at least $100 million invested in each.
"There's a lot of room to grow," Mr. Hashimoto said.
Analysts noted that Japanese investors have become increasingly disenchanted by the Japanese market. They added that, as a result, Japanese are viewing foreign investments much more favorably than they have in the past, opening up opportunities for institutions like Chase.
"Japanese financial institutions are not held in high regard and not structured to sell non-Japanese funds," said Lawrence Cohn, a banking analyst at Ryan, Beck & Co.
But he added that finding the right distribution channels in Japan would be critical. "What Chase is doing makes sense, but it remains to be seen whether they can do it effectively," he said.