London-based Cerulli Associates is releasing a report at the end of this month revealing that foreign and joint-venture asset managers have won a larger slice of the Ñ235 trillion Japanese fund management market, up from 16.1% to 17.5% of aggregate assets. Although it does not expect these gains to last, Cerulli does sound other positive notes.

For example, net new inflows into stock investment trusts has remained positive each month for the past two years, which signals the decline of investors chasing fads and a more long-term attitude. In addition, while many foreign money managers have recently exited the retail business, they continue to find new opportunities on the institutional side.

The growing bank distribution channel is the brightest spot, as it is providing open architecture, which doesn't exist among the dominant broker distributors. This channel now accounts for 15% of assets under management and most of the industry's growth, a figure Cerulli believes will hit 34% by 2006. But much of that is through regional banks, not big city banks, which worries Cerulli as they are candidates for going under.

The analysts also breath a sigh of relief that 2001 saw no more new foreign joint ventures formed. Cerulli has long expressed scepticism about these, and believes foreign fund managers that concentrate on manufacturing product and keep their costs low will do the best. Indeed, the only real success story for foreigners has been the investment advisory company (IAC) market, where foreigners manage 44% of retirement-related mandates and 61% of non-qualified mandates.