Global hedge fund investors love hedge funds having to do with Japan. In fact, half of all HF investment in Asia is in Japan, and the total asset value of funds focusing solely on Japan has jumped 20% in the each of the past five years. The only trouble is, many Japanese investors is not impressed enough to jump into them big time, the Financial Times reports. For one, there is a lack of local talent turning to hedge funds. It may be commonplace in the U.S. and the U.K. for managers from brokerages and mutual funds to take a stab at a hedge fund, says the FT, but in Japan, even top talent at brokerages don’t make as much as they do elsewhere, and certainly not enough to launch a hedge fund. As a result, there are relatively few domestic hedge funds, and it’s the growth of the local market that normally fuels the development of the industry. Further, except for large institutional investors, such as pension funds, few Japanese know enough about HFs to put money in them. The situation is turning, though ever so slowly. Foreign firms, which in the past dominated the Japanese hedge landscape, are increasingly teaming up with locals, which give investors that domestic flavor that can encourage investment. And, in addition to a fee structure that is cheaper than the standard “2 and 20,” Japan has begun making HFs available to mass-market retail investors. If that takes off, say some experts, the masses can increase the domestic HF industry tenfold in five years.
