Liberty Financial is joining a dozen U.S. mutual fund companies that have introduced funds in Japan to get a jump on Japanese consumers' gradual acceptance of the products.
Liberty has created a new company, Liberty Financial Japan, and will offer Japanese investors shares of the Colonial Strategic Income Fund, a pre-existing bond fund sold in the U.S. with $1.6 billion under management. The new class of shares is for Japanese investors exclusively. The fund will be sold through the Japanese brokerage firm Tokai Maruman and several other firms: Tokyo Securities, Naito Securities, Shinei-Ishino Securities, Chiyoda Securities and Japan Global Securities.
Since Japanese investors tend to be risk averse compared to Americans, a bond fund is a logical choice as an initial product offering in that country, Liberty officials said. Liberty is moving into Japan with its strengths. The president of Liberty Financial Japan is David R. Smith, a portfolio manager for Newport Pacific Management with 30 years of investment experience in Japan. He and the resident manager of Liberty Financial Japan, Kusaburo Ohyama, have known each other since the 1970s.
Newport Fund Management, a subsidiary of Newport Pacific Management, has been investing in Asia for over 20 years. It runs the Newport Tiger Fund, the Newport Japan Opportunities Fund and the Newport Tiger Cub Fund. The strategic income fund has $1.6 billion in assets and is managed by Carl C. Ericson, head of taxable fixed income investments for Colonial, a Liberty subsidiary. The fund invests in domestic and foreign corporate and government debt securities. Liberty officials said they expect to introduce more products in Japan in the future.
"Colonial Strategic Income Fund is just the first of what we expect will be several products from Colonial, Stein Roe Advisor and Newport," said Thomas R. Tuttle, chairman of Liberty Financial Japan. The three advisers are all subsidiaries of Liberty Financial.
"The perception in Japan is that there is a real demand for mutual fund products that established American mutual fund companies with good recognition in their fields can bring to the marketplace," a Liberty spokesperson said.
While mutual fund companies are introducing funds in Japan, Chase Manhattan and other banks are taking advantage of a new law that took effect Dec. 1 that allows banks to sell mutual funds in Japan for the first time.
Chase is scheduled to start selling retail mutual funds through its newly-created subsidiary, Chase Investment Trust Management Co. by mid-December. It will also provide asset management for Sumitomo Trust & Banking Co. Before the deregulation effected by the Securities Investment Trust law, only brokerages were allowed to sell mutual funds in Japan. Chase joins less than a handful of banks selling funds in Japan.