The Asian Wall Street Journal: Bruce Fenton and Atlantic in Japan
U.S. Firm Partners to Sell Funds in Japan
By Camille Klass
Dow Jones Newswires
6 January 1999
The Asian Wall Street Journal
SINGAPORE -- U.S. brokerage house Atlantic Financial is looking to
break into Japan's pension and mutual-fund market and is seeking a
local partner, said Bruce Fenton, the company's president.
If successful, such an alliance would be a first with an Asian
partner for the U.S. company, he said. "What we'd be looking for is
a brokerage firm or a bank with an existing client base and its own
sales force," Mr. Fenton said. "We can provide the product and
alliances with American mutual fund companies."
Eighty percent of Atlantic's business is in mutual funds, including
pension plans, while the remainder is in standard brokerage products
such as stocks and bonds. Atlantic offers some 6,500 mutual funds
from such major fund groups as Fidelity Investments, Alliance
Capital Management and Putnam. The company is affiliated with
Fidelity, which undertakes its clearing and holds client assets.
"Japan is the area right now, which we're probably most aggressive
about," Mr. Fenton said. "We already have contact (in Japan) with
our affiliates like Fidelity and Putnam and can leverage on their
resources."
Mr. Fenton, who founded Atlantic three and a half years ago, said
the likely adoption of the U.S.-style 401K pension plans in Japan,
the country's high savings rate and large economy make that market
an attractive opportunity.
The search for a partner began a few months ago and is still in the
early stages, he said. Any alliance will likely be informal
initially, he said, adding that he would be open to "talking about a
merger or acquisition."
In the meantime, Atlantic is flexible about its prerequisites for a
partner, and the company's small size means it can move quickly on
decisions, he said.
"We don't really need to have a large sales force (in Japan)," he
said. "It could be a small, boutique-type of brokerage with 20 or 30
representatives, as long as it feels it can be profitable."
Atlantic also is building on the company's existing relationships
with its affiliates. "If we have a particular client that's
interested in using our services, we can bring in Fidelity, which
has employees who can speak the language," Mr. Fenton said.
His firm, he said, expects to offer in Japan the full range of
services it offers in the U.S. "We can offer our one-stop shop, but
that depends on how well our advantages are perceived. . . . We
think it's a big advantage because it would take a significant
effort even for a large Japanese institution to achieve. A lot of it
is the system we're in and the key is working with partners."
As for targeting Japan's pension-fund market, Atlantic is aiming for
smaller accounts. Currently, Japanese corporate pension funds offer
fixed returns, but the adoption of a 401K plan, being considered by
business and government leaders, would provide employees with more
choices on how to manage their funds. In the U.S., the major fund
companies, which also have set up shop in Japan, typically seek to
offer plans that serve several million workers.
"As a small company, it may be profitable for us to work with
smaller accounts," Mr. Fenton said. "The market for smaller plans
may be underserviced and that's something we could get market share
for."
---
Hong Kong-registered mutual funds recorded net inflows of US$170.7
million in November, the third consecutive month of inflows, the
Hong Kong Investment Funds Association said.
"In November, except for U.S. equity funds and Hong Kong funds, all
the remaining 12 sectors registered net inflows," said Desmond Chan,
association chairman.
In a statement, the association said November's inflows were up from
October's US$45.6 million and September's US$30.6 million. Gross
sales in November hit US$377.6 million, the second-highest amount
for 1998.
Bond funds had net inflows totaling US$88.8 million and European
equity funds attracted US$25.8 million.
Mr. Chan said November was also the first month in 1998 that almost
all Asian fund sectors registered net inflows, but but he cautioned
against reading too much into the data. "While we do see an increase
in investor interest in the Asian markets, it should be noted that
the level of sales, both gross and net, still remains marginal," he
said.
Interest, he noted, is mainly restricted to a few markets like South
Korea, Thailand and Singapore.
Hong Kong equity funds had a net outflow of US$2.2 million in
November, the sixth consecutive month in which redemptions have
exceeded sales. (Dow Jones)
---
HSBC Asset Management's Singapore office said it launched two global
investment funds in city state.
HSBC Asset Management, the global investment advisory and fund
management arm of the Hong Kong & Shanghai Banking Corp., had more
than US$454 billion under management as of last September.
The new funds, which will be exclusively distributed by Hong Kong
Bank, are the HSBC Global Growth Fund and HSBC Global Fixed Income
Fund.
The first one invests in the Luxembourg-registered HSBC GIF Global
Opportunities Fund, while the Global Fixed Income Fund invests in
the HSBC GIF Global Bond Fund, also registered in Luxembourg.
The Global Growth Fund aims for long-term capital appreciation by
investing in equity markets world-wide, particularly developed
countries. It seeks to invest in companies with growth potential,
which may mean, at times, a bias toward smaller companies, rather
than mature concerns.
The Global Fixed Income Fund, aimed at more-conservative investors,
invests in government or corporate bonds with at least a single-A
rating. The fund aims to provide "reasonably high income" while also
catering to investor concerns about capital preservation. (Dow
Jones)
(c) 1999 Dow Jones & Company, Inc.
