Japan: A Reality Check for Visiting Hedge Fund Managers

New York, NY, June 12, 2009 --(PR.com)-- Opalesque has published the 2009 Opalesque Japan Roundtable, whose findings will surprise many financial professionals. In this 33-page Roundtable script, Japan-based investment veterans share how the financial crisis has changed investing in and asset raising from Japanese institutions. The new Japan Roundtable can be downloaded here for free: http://www.opalesque.com/RT/RoundtableJapan2009.html

Reality Check

In their quest to raise assets, considerable numbers of overseas managers are visiting Japanese institutions each month, looking for funding and assuming that the Japanese must be ready to invest money merely because they have it, whereas it is not there some other places. However, many allocators in Japan are very much in shell shock - Chris Wells from White and Case, who lives and works in Tokyo since 1983 says that it will "take time for allocators to realize how much they really have lost. A lot of investment staff aren't even telling their bosses how bad it is."

Paradigm Change: Brand does not allure Japanese investors any more

However, more than has been true for a long time, the ability to compete for Japanese assets is much more equal today than before, because with the recent events, the shine has come off of the big name hedge fund managers. According to Wells, "Japanese allocators, who traditionally tend to be pretty picky consumers concerned with name value, have lost this type of fixation on brands and perceived reputation. While before they may have been blinded by the light of the big famous asset managers or hedge fund names, now it matters less, all names are more equal. The question for managers will be, how did you do last quarter? Where are you going? How good are you at communicating where you are going? Do we fully understand your strategy?"

Starting investments from ground zero

Wells further explains in this Opalesque Roundtable that some large allocators and hedge fund investors in Japan are starting completely from ground zero and "every single fund investment is undergoing a review, evaluation and benchmarking in a way that wasn't done previously."

Japanese assets not more "sticky"

Rory Kennedy from UMJ add that historically, "you have to put more effort into getting Japanese institutional money. But in return, the consensus was that that Japanese money would therefore be ”sticky” and would stay longer in your funds. However, following poor performance across hedge fund strategies over the last two years, it seems that from now on, you will have to put as much effort or more into raising Japanese money, but it will be no more loyal than any other money in the world. In fact, it may be less loyal because they usually insist on liquidity as well."

The Opalesque Japan 2009 Roundtable was sponsored by AIMA Japan and took place on April 16thj at the Tokyo office of Nikko Citi. Opalesque thanks Ed Rogers from Rogers Investment Advisors and Koichi Shijima from Nikko Citi for helping to put the following Roundtable together:

1. Shinichiro Shiraki, Founding Member, Monex Alternative Investments
2. Chris Wells, Partner, White & Case
3. Koichi Shijima, Director, Nikko Citi
4. Rory Kennedy, COO, United Managers Japan (UMJ)
5. Ed Rogers, CEO, Rogers Investment Advisors
6. Yhu Kuni, Portfolio Manager, Stats Investment Management
7. Shin Matsui, Chief Portfolio Manager, Nissay Asset Management

In addition, the Roundtable discussion highlights the following important developments:

● The evolution of Japanese hedge fund industry - who are the new managers achieving positive returns?
● Information inefficiencies in the Japanese markets
● What impact does the ailing Japanese real estate market have on the economy?
● Regulatory update
● Why each investor in Asian funds should do significant due diligence on the fund's ability to manage their foreign exchange exposures
● What is the number one mistake for Western firms when hiring Japanese staff?

The Opalesque Japan Roundtable can be downloaded here: http://www.opalesque.com/RT/RoundtableJapan2009.html. All other previously published Opalesque Roundtable Scripts can be accessed in the Roundtable archive:

About Opalesque:
Matthias Knab, Director of Opalesque Ltd, moderates the Opalesque Roundtables. Matthias Knab is an internationally recognized expert on hedge funds and alternatives.

In 2003, with the publication of its daily Alternative Market Briefing, Opalesque successfully launched an information revolution in the hedge fund media space: "Opalesque changed the world by bringing transparency where there was opacity and by delivering an accurate professional reporting service." - Nigel Blanchard, Culross. This hybrid financial news service, which combines proprietary industry news stories and filtered third party reports, has been credited by many industry insiders with delivering precise, accurate, and vital information to a notoriously guarded audience.

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Nisha Mittal