While the European fund industry is perceived by many to be the next best place to grow assets, the outlook in Japan is not so good. "The picture in Japan is, I'm afraid, less bright [than that of Europe]," said Deborah Smith, a VP in State Street Corp.'s international offshore business. Smith also spoke at the NICSA conference last week in Miami.

Three years ago, things looked very promising in the Japanese asset management industry. The implementation of deregulation and the emergence of new distribution channels combined with a wealthy population (household savings were at $12 trillion) gave the market there a lot of potential, even though the overall economy had been stagnating for years, Smith said. "It looked essentially like a gold mine."

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