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USD680bn boost to Japanese investment trusts in next five years

Tax-exempt NISA will attract between JPY6trn and JPY14trn annually over the next five years, potentially reaching an estimated JPY68trn, according a joint report from Cerulli Associates and Nomura Research Institute (NRI).

The report – Asset Management in Japan 2013: Opportunities and Challenges for Foreign Managers – is the result of the collaboration by Cerulli Associates, a research firm specialising in global asset management and distribution trends, and NRI, a provider of consulting services and system solutions.
 
Under NISA guidelines, beginning 1 January 2014, individuals may annually invest up to JPY1m in a tax-free account for up to five years. The research examines the investment vehicle’s impact on various asset classes, outsourcing, and asset managers. With taxation on dividends and capital gains in Japan increasing from 10 per cent to 20 per cent in 2014, banks are eager to shrink their balance sheets in the inflationary environment.
 
“The projected NISA market growth would represent both a massive change in the mind-set of Japanese households and a greater willingness to leave the sanctuary of safe assets,” says Yoon Ng, director at Cerulli Associates.
 
“Our research shows that as many as 31 million people could use the new savings account, especially as changes to pensions and the likelihood of inflation will put a greater onus on the individual to protect their assets,” says Sadayuki Horie, senior researcher at NRI. “Just as importantly though, it will provide a much-needed injection of funds to a moribund investment trust industry.”

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