Profile of Mutual Fund Market in Japan

Vis-à-vis India-Akarshi Jain

What is mutual fund market?made up of a pool of funds collected from many investors for the

purpose of investing in securities Operated by money managers, who invest the

fund's capital and attempt to produce capital gains and income for the fund's investors.

Portfolio is structured and maintained to match the investment objectives stated in its prospectus.

Advantages of Mutual FundSmall investors have access to professionally

managed, diversified portfolios of equities, bonds and other securities

Each shareholder participates proportionally in the gain or loss of the fund.

Mutual fund units, or shares, are issued and can typically be purchased or redeemed as needed at the fund's current net asset value (NAV) per share.

Profile of Japanese Mutual Funds MarketJapan's mutual fund market 8th-biggest in

the worldLehman Shock in 2008 Europe's debt crisis and the yen's strength.Japanese Investors suffered investment losses

of $169 billion

Recent Trends in Investment in Mutual FundsJapanese individuals hold some $15 trillion in

assets Less than 5 percent goes into the mutual

fund market. Most stays in bank and postal depositsattracted net inflows in 2011 for the 8th

consecutive yearmutual fund buying by retail investors is

shrinking.

The amount of initial inflows into newly launched mutual funds fell to 1.63 trillion yen in 2011, down 32 percent from the previous year.

2013: The Japanese mutual fund market grew by a record amount in 2013, boosting overall asset size above 80 trillion yen

Net Inflows rose by almost six times from a year earlier to 10 trillion yen

Retail investors poured huge amounts of money into foreign high yield funds, real estate funds and exchange-traded funds in 2013.

The weakness of the yen is expected to help boost performance and lift the asset value, as many funds are foreign currency-denominated funds

ChangesAsset management companies and fund

distributors are becoming reluctant to market sophisticated products such as dividend-oriented funds

Japanese regulators tighten rules on selling such products, requiring investors to be given a full explanation of the risks.

launch of a tax-free investment facility dubbed NISA, for the Nippon Individual Savings Account

4.4 million Japanese have opened such NISA accounts by Jan. 1.

The government projects NISA accounts could draw more than $250 billion by 2020.

Mutual Fund Market in IndiaMutual Funds available for over two decades

in the market. Less than 10% of Indian households have

invested in mutual fundsperceived high risk and a lack of information

on how mutual funds work

The industry witnessed consistent declines of 6.3 percent and 5.1 percent in 2011 and 2012 respectively.

concentration of mutual funds to a few major cities 

Regulation Changes:Changes in regulatory guidelines-example

ban on entry load, stringent KYC norms, guidelines on transaction charges, tightening valuation and advertisement norms

As concentrated in few cities, AMCs are allowed to charge an additional total expense ratio.

 SEBI has also relaxed the mandatory requirement of a permanent account number (PAN) card or bank account for cash investments of up to INR 20,000 per financial year

 simplify the distributors’ registration process and widen the distributor

Mandated AMC’s to set aside certain percentage for investor education fund.

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