(Bloomberg) — A Nomura Asset Management equity investment trust that was once called the “¥1 trillion fund” due to its size is effectively being combined with one of the firm’s flagship products after years of weak performance.
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The asset manager submitted a filing on Friday seeking to have Nomura Japan Equity Strategy Fund share the investment policy of Nomura Japan Open, after consulting with its stakeholders.
The strategy fund was established in February 2000 and its net assets climbed to as high as 1.167 trillion yen ($7.8 billion) in May of that year as it profited from tech-sector bets amid the IT bubble.
But its performance has deteriorated since then, with its returns falling short of the Topix stock index in four of the past five years. The fund’s expense ratio, the cost for investors to put their money in the product, also exceeded the industry’s level, at 2.08% versus the median 1.65% in the sector. Its net assets have shrunk to around 5% of its peak, at ¥55.7 billion.
Japan’s policymakers are seeking to get households to shift more of their savings to investments to boost their retirement funds as the portion of the elderly in the population increases at one of the fastest paces in the world. That’s putting pressure on fund managers in Japan to bolster returns and lower costs as individual investors look abroad for better deals.
Tens of thousands of clients will be affected by the consolidation of the funds, according to Susumu Saeki, managing director of Nomura AM’s product management department. The firm decided that the move would be in the best interest of the strategy fund’s investors because the bigger size is expected to improve management efficiency and reduce trust fees, he said.
(Adds company executive comment in last paragraph. An earlier version of this story corrected the year when the fund was established.)
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