In Japan, investment funds, their management activities, as well as marketing of fund shares, are totally under supervision of the Japanese financial regulator. If you intend to obtain a financial license in Japan, this is the right place to file an application.
Foreign investment in Japan
Japan, as one of the world's largest economies and one of the leading exporters of FDI, has nevertheless, until recently, de jure and de facto remained relatively closed to foreign investment. Currently, the situation is changing: the Japanese authorities have recognized the need to attract foreign investment in the country. Japanese companies are increasingly active and interact with foreign partners and competitors not only abroad but inside the country as well. There is an increasing diversification of such forms of interaction, and establishing investment funds in Japan is one of them.
At the same time, Japan's move towards greater openness in the capital market involves a number of changes in public policy, corporate governance, and finally creates a new competitive environment.
Below, we will describe Japan's regulation of fund management activities in more detail.
Among advantages of investment funds in Japan, should be noted:
- Diversification. The risk of a decrease in the value of investment assets is minimized due to double diversification: distribution of the fund's assets among various financial instruments (stocks, bonds, corporate rights, etc.); distribution of the fund's resources among various issuers within each of the financial instruments (shares of various companies, corporate bonds, local government, government bonds, etc.). Diversification in the presence of negative correlations avoids sharp fluctuations in the value of the fund's assets: when some investments fall in value, others will rise.
- Liquidity. The liquidity of open-ended investment funds allows investors to quickly sell the fund's securities and withdraw the invested funds within 3 banking days. The ability to choose an investment strategy. Asset management companies in Japan, as a rule, offer their investors several types of investment funds, differing in their investment strategies. Some funds invest only in a specific sector, while others specialize in specific financial instruments (bond funds, equity funds, etc.). The main criteria for differentiating strategies are profitability and risk.
- Professional management. The decision-making process for managing an investment portfolio in Japan is multi-stage and is the result of the work of a whole group of professionals in the asset management company - financial analysts, risk managers, portfolio managers.
In addition, professional managers have at their disposal all the necessary analytical materials, including operational information on the dynamics of the stock markets, which makes it possible to manage the investment portfolio with the highest efficiency and the lowest risk.
Legal framework for the Japanese funds management
Managers are required to register with the financial regulator. However, there is an exception to the requirement to register a fund manager in Japan for CIS countries.
Those who intend to provide investment advisory services in Japan must be registered separately.
If you intend to set up an investment fund in Japan, then you should be aware of the responsibilities. The investment manager is responsible for:
- drafting contracts with the client;
- charter documents for clients;
- reports related to the fund's assets.
Japanese investment fund: authorization
Generally, anyone intending to carry out investment management activities in Japan must register as a business investment management operator.
The current Japanese legislation uses the concept of a joint investment institution and interprets it as a corporate or mutual investment fund, which attracts investors' funds for further investment in securities of other issuers, corporate rights in order to make a profit.
Investment funds are widespread methods of collective investment in Japan, since the pooling of funds of many investors can significantly expand the range of investment opportunities and carry out more efficient management of these funds.
The modern Japanese market is potentially attractive to foreign investors, or can be such, given the support of foreign entrepreneurship from the Japanese government at the national and regional level, which is systemic and complex in nature and covers the legislative, organizational, and financial spheres.
By purchasing the fund's securities in Japan, the investor becomes a member of the fund and receives his share in its assets. Investment income is formed due to the growth in the value of the fund's investment objects, which is reflected in the growth in the market value of securities issued by the fund.
We have provided a brief review of the requirements for investment funds, the basic laws governing this activity and how foreign managers can offer their services in Japan.
If you have additional questions, you can order a consultation on the regulation of investment funds in Japan from the legal professionals of our company. We provide legal services at a high professional level. Many years of experience allow us to quickly and efficiently register an investment fund in Asia or any other jurisdiction of your choice.