Signs are emerging that Japan is making a strong return to the hedge fund industry. This is after a decade of very little new hedge fund activity in Tokyo when funds and investors alike were spooked by tough regulations and challenging financial infrastructure. Now that's changing, and Tokyo is leading the charge in an attempt to reinvigorate an industry that once played a more significant role in Tokyo. At least eight new fund managers have been awarded licenses to operate over the past 12 months.
While the large Japan-based fund allocators have been showing interest in the alternative space, most of that is targeted offshore. It seems that it is, in fact, the increased interest from global investors to access the key Japanese investment talent that is driving current fundraising for these new Japan-based managers. This slow-but-steady resurgence is further spurred by the government’s push for fund managers to view Tokyo as a desirable place to base their new business and launch onshore again after many had opted over the past 10 years to set up their firms in Singapore, Hong Kong, or even Europe and the U.S. due to friendlier regulation, access to capital and tax regimes.
The Tokyo Metropolitan Government (TMG) has introduced the Emerging Manager Program, which includes initiatives such as operational cost subsidies for startups, real-estate accessibility following the hedge fund hotel mantra we saw in the U.S. in the past couple of decades, and more flexibility in terms of licensing for early-stage hedge fund managers—all with the idea of making it easier for a manager to seriously consider staying onshore instead of leaving to take their talents elsewhere. Additionally, to ensure hedge funds start off their operations on the right foot, TMG has launched a “Qualified Outsourcing Provider” program to steer managers to the most reputable and knowledgeable providers around the industry while still maintaining cost control through the government subsidies.
We’re thrilled to announce that we’ve been approved to be part of the program.
SS&C Eze is one of only eight providers to be granted the status and one of the first global investment technology players to become part of the program. We hope to use this as a starting point to become a key provider in Japan’s resurging hedge fund market, and to be able to provide a robust and scalable global technology platform to help managers streamline their business as they grow.
While the Japanese hedge fund market is just starting to awaken, SS&C Eze is already working with some of the early qualified hedge fund managers who are participating in the Emerging Managers Program. We are leaning on our extensive experience in helping startups support their daily workflows.
At the same time, we hope to partner with them to ensure we continue to evolve to meet any specific needs Japan-based hedge fund managers may need to succeed.
An exciting future lies ahead of Japan with the country’s new hedge fund industry, and we are thrilled to be part of this journey.
Alternative Investments, APAC, Asset Management