Australian fund managers push into Japanese market

2 August 2011

| By Andrew Tsanadis |

The baby boomers of Japan are sitting on a $15 trillion nest egg and Australian fund managers are keen to capture a share of the market.

A report, commissioned by Austrade and written by PricewaterhouseCoopers (PwC), has found that Australia is already the second largest destination for Japanese offshore investment after the United States.

Around 96 per cent of those investments are in Australian bonds and the instability facing the US market is providing an opportunity for Australian fund managers to increase their market share.

The report, entitled Australian Fund Manager’s Roadmap To Japan, found that if only one per cent from pension funds to households were to be invested in Australian investment trusts, there would be a growth in investment trust assets of over A$53 billion.

Mark Johnson from Financial Centre Task Force says this could widen to equities as well.

“They (Japanese investors) see the potential for higher yields, they see the potential for growth and they see that coming from a market with which they’re not unfamiliar,” Johnson said.

According to Andrew Wilson from PwC, 66 per cent of the investable assets held by households are sitting in cash and deposits earning little yield and this is fuelling the quadrupling of Japanese investment in Australian bonds.

“Fund managers globally look at accessing the household wealth of Japanese investors as the Holy Grail,” Wilson said.

Currently, Colonial First State Asset Management, AMP Capital Investors and Invesco Australia all act as sub-advisors to Australian bond funds owned by Japanese asset managers, according to the report.

Given the number of Australian sub-advisors, Mark Johnson believes access to the Japanese market can be achieved.