Nikko Asset Management is launching an open-ended infrastructure equity fund in Japan that will compete head-on with JapanÆs most successful international fund, a utilities strategy that has pushed Pictet Asset Management to the fore among global fund managers in that country.

Last year Pictet surprised the funds industry by becoming the largest foreign asset manager in JapanÆs retail market, surpassing Goldman Sachs Asset Management and Fidelity International, thanks to its Global Utilities Fund, which has accumulated Ñ1.6 trillion ($13.3 billion).

Pictet executives have attributed success to offering an easily understandable product that provides returns that are stable, better than what domestic asset classes can give, and in the shape of monthly income (for an in-depth analysis of JapanÆs funds industry and PictetÆs rise, see AsianInvestor magazine, February 2007 edition).

Nikko is therefore introducing a global infrastructure fund. ôJapanese investors perceive infrastructure as similar to utilities, but we ant to expand this notion beyond electricity and gas companies,ö says Keiko Sakamoto, managing director and head of product development in Tokyo.

She says this means the fund will look at stocks for airports, telecommunications and highway companies, for example.

The firm has hired Macquarie Alternative Investments in Sydney to sub-advise the fund.

The firm wouldnÆt reveal its goal for asset-raising, but Sakamoto says it prefers a gradual accumulation rather than churn-and-burn tactics. ôOf course we hope it will become a big fund,ö she adds. Shinsei Bank is the exclusive distributor.

Nikko reports that stripping out the infrastructure-related stocks from the MSCI World Index, the sector has returned a cumulative 17-18% with volatility of 13% since 2000, in yen terms. It expects its fund to perform along similar lines û which is enough to beat indices in domestic asset classes. The fund will also provide monthly dividends, a feature that has become a must-have in JapanÆs retail space. It charges a management fee of 1.627% while Shinsei Bank will levy a 3% front-end load.