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NISA program could be a shot in the arm for Japan's MF industry: Cerulli

Still, while asset managers are generally welcoming of NISA, Cerulli notes that the responses of local and foreign players tend to be different.

January 30, 2014 11:22 IST | India Infoline News Service
The tax-exempt Nippon Individual Savings Account (NISA) program could be a shot in the arm for Japan's mutual fund industry.

According to estimates from Nomura Research Institute, highlighted in a joint publication with Cerulli Associates titled Asset Management in Japan 2013, released in December last year, NISA could unleash about ¥3 trillion into the country's mutual fund market in the five years starting in 2014.

"Amid a favorable domestic market and generally good investor mood, many industry participants consider NISA to be among the strongest opportunities for growth in the mutual fund market," says Yoon Ng, Asia Research Director at Cerulli.

Still, while asset managers are generally welcoming of NISA, Cerulli notes that the responses of local and foreign players tend to be different. While domestic managers are in high gear to launch new NISA-oriented products on the back of requests from
affiliated distributors, most foreign managers are in wait-and-see mode.

"They are using existing funds for NISA as they wait to discern what would be the best elements to inject into any new NISAexclusive products," notes Ng.

One key to the success of NISA is to get banks' clients to open up some of their massive deposits. But the process may take time. "Banks are slowly catching up with brokerages while their clients' conservative attitude toward risk products will need to be addressed," adds Ng.

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