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The Asian Wall Street Journal: Bruce Fenton and Atlantic in Japan

U.S. Firm Partners to Sell Funds in Japan

 

News- economics and investments

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."

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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)

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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.



 








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