Reforming the Fee Structure of Investment Trusts to Increase Demand

Naoyuki Yoshino () and Naoko Aoyama
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Naoko Aoyama: Asian Development Bank Institute

No 658, ADBI Working Papers from Asian Development Bank Institute

Abstract: Since 1998, sales channels for investment trusts have expanded in Japan. We expected this to result in greater demand for investment trusts but these expectations have yet to be met. The underlying causes of investment trusts’ slow growth may be due to negative net returns to individual investors during the economic downturn—i.e., after deducting costs from dividends. When the Japanese economy is sluggish, asset management companies should invest in high-growth Asia, among other regions, rather than the domestic market. And when domestic financial markets are strong, companies should invest more in Japanese markets. Investment trusts are the vehicle for seizing world economic trends. However, the performance of Japan’s investment trusts has not been as good as that of the United States (US). To further enhance demand for investment trusts, their fee structure must be changed so that asset management companies, distributors, and individual investors seek the same goals. In other words, the interest of distributors and asset management companies would need to be better aligned.

Keywords: investment trusts; fee structure; sales load; asset management (search for similar items in EconPapers)
JEL-codes: E44 G11 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2017-02-06
New Economics Papers: this item is included in nep-mac and nep-sea
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