Hoping to cash in on an aging Japanese population that's funneling its retirement savings into bank deposits in the face of a pension pinch, Fidelity Investments will launch three funds that focus on paying dividends, Bloomberg recently reported.
Bank deposits in the Land of the Rising Sun account for roughly $6.3 trillion in savings, or 53% of their individual financial assets, and Fidelity think it can quadruple the assets it manages for Japanese individuals and companies to $100 billion in the next five years.
Much like here in the U.S., the Japanese pension system is under stress. It's projected that by 2014 one in every four Japanese will be 65 or older. As a result, the government is forcing Japanese workers to contribute more to their pensions, although they may receive less when they retire. The government is also considering pushing pension payment eligibility past 65. In addition, the typical bank deposit in Japan pays an average interest of just 0.001%, so the outlook for alternative investments is promising.
"The pension situation in Japan is a great environment for asset management companies to offer their products," said Thomas Balk, the Boston fund giant's newly minted president of operations in Japan.
Since the Japanese are used to low-risk, low-return savings, the new funds will lean heavily on bonds to reduce volatility.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.