JAPAN Trends and Developments Contributed by: Yasuzo Takeno, Ken Miura and Nobuharu Onishi, Mori Hamada & Matsumoto
Fund structures According to the laws of Japan, investment funds are generally divided into three different categories: • investment trusts; • investment companies; and • limited partnerships. The investment trust (sometimes referred to as a contractual type investment fund) is one of the most popular investment funds for Japanese investors. In fact, numerous investment trusts are established in Japan every year, and units of these investment trusts are actively offered/sold to Japanese investors by securities companies and banks. It should be noted that not only investment funds established in Japan but also investment funds established outside Japan (such as an FCP in Luxembourg or a unit trust in the Cay - man Islands) are offered to investors in Japan, and a significant amount of money is invested into those foreign investment funds from Japan. According to statistical data released by the Japan Securities Dealers’ Association (JSDA) on 13 June 2024, the total net asset value of public - ly offered investment funds established outside Japan (for Japanese domestic investors) as of the end of March 2024 was JPY8,489.8 billion. In Japan, an investment company (sometimes referred to as a corporate type investment fund) is mainly used in the context of REITs. In other words, an investment company established in Japan is not generally utilised for the purpose of investment into securities (such as equities or bonds). However, it is also true that some securi - ties firms actively offer various types of SICAVs established in Luxembourg to Japanese retail investors.
Growing Demand for Alternative Investment Funds in Japan: From Private Placements to Public Offerings Introduction State of the investment funds market For a long time in Japan, investment funds for retail investors only invested in traditional assets and their derivatives, while alternative investment funds were only marketed to institutional inves- tors. However, in recent years, this trend has begun to change. This article will discuss these changing trends, but will first briefly describe the basic information of investment funds in Japan. In Japan, investment funds are one of the most popular financial instruments for both institu - tional and retail investors. Types of private placement and public offering Under the laws of Japan, units/shares of invest - ment funds may be offered by way of public offering or private placement. In a private place - ment, an issuer may be exempted from certain disclosure requirements that apply to public offerings. There are basically three different types of pri - vate placement exemption: • Private Placement to a Small Number of Persons; • Private Placement to Professional Investors; and • Private Placement to Qualified Institutional Investors. In general, a Private Placement to a Small Num - ber of Persons focuses on the number of offer - ees, while Private Placements to Professional Investors and Qualified Institutional Investors focus on the offerees’ qualification.
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