At present Citi is establishing relationships with the leading five securities firms. “The biggest brokers have all built up big teams for defined contribution,” Kawasjee says. “The banks have been latecomers.”

The firm has just established a distributor relationship with one leading bank – he declined to name it – and Kawasjee expects to finalize several more deals with banks by the summer. Since 1998, when banks were first allowed to distribute mutual funds in Japan, his firm has had to rely on family ties: Citibank was its sole bank distributor.

The trick is offering products that banks want to sell, he says. For example, Citigroup’s product set runs from A to Z: yen bond and money market funds, domestic equity funds, global bond funds, regional equities funds, balanced products, and specialty products such as index funds, sector themes or guaranteed investments. But distributors don’t necessarily want all of this. “We can’t peddle what distributors don’t want,” he says.

In demand are funds with a track record that are straightforward and stable. "We’re now introducing a yen LIBOR-plus product that will be very competitive under the new mark-to-market accounting rule from this April," Kawasjee says. This targets the vacuum created by the obsolescence of Japanese MMF (short term bond funds called Money Management Fund) that were popular in the old days of declining interest rate and book valuation. Short-term bond funds are in. "Fixed-income money is shifting out of existing funds. Distributors need to capture that money," Kawasjee notes.

Another wrinkle to satisfy distribution partners is to ensure they get an exclusive product from a fund manager. “These deals require tailoring,” Kawasjee explains. For example, a money manager can offer one bank an index fund; it will offer a second bank an enhanced index fund – the same underlying passive investment but with a larger tracking error. These details make establishing distribution relationships difficult.