The case for mutual funds in Japan

The terrain for mutual funds in Japan has been rough. Many foreign firms rushed in following deregulation in the mid-1990s expecting a pot of gold. The market is miniscule, yet Japan has the world's second largest savings pool and its investors desperately need better returns to enjoy a dignified retirement. But disappointment over the structure of the new defined contribution law, sagging stock markets and a perceived risk aversion among Japanese investors has prompted many firms to scale back their retail business or close shop altogether.