Japan Hedge Funds

Japan Hedge Funds

Free Hedge Fund Video on the Hedge Fund Industry in Japan

The following video was recorded for the Certified Hedge Fund Professional training program.  In this video, recorded in Japan, I give my take on the regulations and taxes for hedge funds operating in Japan and how this country is positioned in the alternative investment industry.  If you are reading this via RSS or email, click here to watch the video.  

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Transcript for Japan Hedge Funds

Hello, this is Richard Wilson. I’m coming to you from Tokyo, Japan today. I just finished speaking at the Hedge Fund Congress in Tokyo downtown. And what I want to do is share with you an update just on family offices to family office wealth management industry and the hedge fund industry here in Asia. This summer I’ve been traveling around to Singapore, Hong Kong and Tokyo, Japan and I wanted to just share what I’ve learned about what’s going on in these areas.

First off, family offices aren’t really allowed in this very sense or the term in Japan due to regulations, so really what they have here is retail banking and you get more service basically if you’re a high-net-worth or ultra high-net-worth professional. What that means is that family offices in other areas are going faster than others would, because people in Japan don’t really have the type of service here. So family offices in Hong Kong, China and especially Singapore are growing very quickly, that’s what’s interesting about Singapore, is that just in the last year and a half over a million new people have moved to Singapore and it has grown from 4.2M up to over 5.5M people.

The amount of wealth there is enormous. It’s one of the richest cities in the word that has more billionaires per capita than any other place in the world. Also, 1 out of every 25 people in Singapore is a millionaire. Now, when it comes to the hedge fund industry, what I’ve been learning here is that if you’re going to start a hedge fund there’s so many regulations in Japan. Often times it can take 6, 8, 12 months to start a hedge fund. There’s a lot of red tape, whereas if you start a hedge fund in Hong Kong, your rent and your expenses are higher, your overhead is higher. It’s a little bit more expensive, where if you start a hedge fund in Singapore, you can get registered typically within 2 to 4 weeks to open up your fund for a third of the cost. What it might cost you in Hong Kong is a lot lesser in cost here in Tokyo. So the result is that a lot of people are going to Singapore.

When it comes to taxes, which affects both family offices and hedge funds, the tax rate here in Japan is around 40% and Hong Kong I’ve heard it’s around 16% and in Singapore I’ve heard it’s around 11% to 13%. So basically Singapore has the best tax situation and tax environment for both wealthy individuals and hedge fund managers. Hong Kong comes in second with higher taxes, around 16% but also higher cost of living than Singapore. And then Japan is sky high in terms of taxes. It’s pretty close to the United States.

So if you think about where to start a hedge fund, Singapore and Hong Kong have the least regulations and least expenses for getting started. They have lower expenses in operating than Tokyo and lower taxes. And because Singapore is the easiest to work in, the least regulation, the lowest taxes, there’s just this huge influx of assets and money coming to Singapore. I’ve heard Indonesia, Malaysia, New Zealand, even Australia, Japan and China, lots of people are going to Singapore. I imagine it’s going to keep on growing very quickly and that’s the number one lesson I’ve learned traveling here in Asia and speaking at a few conferences and meeting with lots of different wealth management firms and hedge fund managers is that Singapore is really becoming a huge hub for growth in the future.

Of course China, Hong Kong, Tokyo, all these other big cities and lots of further growth and emerging markets, as there are some other, I’ve heard they have huge markets already. I do think Singapore is going to be the head of where a lot of business is done in the future. So I hope you enjoyed this update on Asian hedge funds and family office wealth management industry here in Asia. I know it wasn’t really in depth. For those of you wondering how things worked over here or you’re looking to raise capital in this region or if you’re looking to start a hedge fund and you’re based in Asia or near Asia and you’re wondering where in Asia possibly to start your hedge fund, I hope this video helps you on your way and to give research on that topic.

Thanks for joining me. I’m Richard Wilson and we’ll see you again soon.

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