Nomura Securities has launched a low-risk fund of hedge funds to the Japanese retail market. Nomura Fund Research & Technology is advising the new fund's manager, Nomura Asset Management, on allocating among the various constituent hedge funds.
Hedge funds are a new area for Nomura, which over the past two years has begun offering absolute-return vehicles to its institutional clients. Earlier funds of funds all invested in offshore fund managers investing in the United States or European markets.
This new product not only marks Nomura's first attempt to sell hedge fund strategies to retail investors, but also the first time it is investing in hedge funds investing in Japanese equities, says Tamotsu Matsunuma, general manager of investment technology development at Nomura Asset Management in Tokyo. The funds themselves, however, are foreign Japan market-neutral hedge funds based offshore. This is because they have better capacity to short the market, Matsunuma says.
If this fund of funds is a success, Nomura Securities will likely seek to launch others. But the response has been only so-so, raising ¥11 billion ($93 million) over the past few weeks. Given the parlous state of the Japanese retail funds industry and of its equity markets, this is not bad, even if it is less than a powerhouse like Nomura can usually amass.
Matsunuma says the firm did not expect a huge response because Japanese investors are unfamiliar with both the concept of a market-neutral fund, as well as a fund of funds. Nonetheless, Japanese firms such as Nomura see the success of hedge funds in the United States among institutional and high-net worth clients, and will continue to experiment with absolute-return products of their own.
