Japan presents tough environment for hedge funds seeking investment

Although Japanese investors appear keen to invest in hedge funds, the environment for selling products in the country is difficult and highly regulated. Hedge Funds Review explores the challenges facing funds seeking Japanese investors.

According to OECD estimates, Japanese pension funds had over $1 trillion in assets at the beginning of 2007. One research company has estimated that Japanese financial institutions increased their investment in hedge funds from 63% in 2006 to just under 70% in 2007. A Nikkei survey of major corporate pension funds found that 75% of respondents included alternative investments in their portfolios.

Relative to other markets such as the US, the regulatory regime in Japan is quite favourable towards