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Sunday August 07 2022
Japan Seen as Next Best Market to Find Investors

Bridge News  February 25, 1999

by Jamie LaReau


      Chicago--Feb 25--International fund management firm Magnum Global Investments is rolling the dice and taking a gamble on one part of the world most probably would not consider to be a good bet--Japan. But Magnum executives said now is the time actively to seek both investors from Japan and develop hedge funds marketed internationally and run by talented Japanese investment professionals that would capitalize on the potential of the Japanese market.

      Magnum Fund General Partner David Friedland said one reason Japan is ripe for hedge funds is because regulations have been relaxed, allowing trust companies and institutions to invest their assets outside Japan.


      "So there is an opportunity for large Japanese-based investments to target Japan. In addition, because of the bear market experience in Japan, really since 1989, investors in Japan realize that stock markets don't always go up and you need to look for alternative investments to making money other than investing in mutual funds or the stock market," Friedland said.


      He said hedge funds were the perfect candidate for the Japanese investor wanting a moneymaking alternative investment.


      "We're looking to offer our services to the Japanese investment community, either directly into the Magnum Fund or by creating product or funds for Japanese institutions that they can sell to their clients," he said.


      Magnum specializes in developing and identifying leading hedge funds and creating fund of funds combinations of hedge funds that seek more stable long-term returns than individual funds.


      Magnum presently has 18 fund of funds and 12 single strategy hedge funds. Friedland hoped by actively recruiting Japanese investors, the assets in those funds would increase significantly.


      "Obviously, we're looking at this as a long-term project," Friedland said. "Nothing's going to happen overnight in Japan, but there is potential to raise significant money."




      There's potential, despite the fact that Japan still struggles to boost its troubled economy, by following a weak yen policy instead of biting the bullet and putting more aggressive bank reforms in place.


      But Friedland said Japanese investors have the financial acumen for investment, and they can put their money where their mouths are.


      "The trust companies have huge amounts of capital available to them and the insurance companies," Friedland said. "It's not that the country's run out of capital money. Certainly the economy is struggling, but the trust reserves and social security and a pool of wealthy individuals are in Japan and they need to invest the money."


      Friedland noted that unlike US investors, who look at a 10% dip in the stock market as a buying opportunity, Japanese investors realize markets can and do go down for extended periods of time. "They need to look for alternative investments if they want to protect capital," he said.


      He also noted Japan was the second largest economy in the world and it had huge capital resources available.


      But as far as how close Japan was to an economic recovery, Friedland said he didn't see that happening anytime soon.


      "They need to get a weaker yen to move to that end," Friedland said. "I think you've started to see a little bit of that in the last couple of weeks, but certainly I think the yen has to weaken a lot more. There are a lot of problems in the banking sector it's difficult to say how quickly that's going to sort itself out."


      Friedland was optimistic Japan's economy would rebound but not for at least 3 or 4 more years.




      In the meantime, he said, if an investor in Japan wants to invest in a Magnum fund, he or she would have to complete an offering memorandum and then have a minimum of $100,000 to invest.


      Besides Japan, Friedland said Magnum also was looking to target South Africa, noting that the regulatory environment there has also loosened in recent years which allows institutions to invest their assets off-shore.


       Friedland said new investors probably would see a good return pretty quickly, pointing out that many of Magnum's funds are among the top performers in the world. He said Magnum US Equity Fund was ranked the best performing fund of funds in the world for the past 3 years by Standard & Poor's Micropal and MAR Hedge, an industry journal that ranks hedge fund performance. Magnum Tech Fund similarly was ranked the best-performing fund of funds in the world for 1998.


      As for Magnum's hedge funds, Lipper Inc. rated the Lancer Voyager Fund the best US equity fund in the world for 1997, among other recognized Magnum funds.


      Bridge News, Tel: (312) 454-3470

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Source [B] - BridgeNews Global Markets


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