ABSTRACT
In late 1998 and early 1999, nothing in Japan's financial marketplace appeared to foreign financial companies to be more incongruous, and more exciting, than the minuscule level of Japanese investment in mutual funds. (In Japan mutual funds are usually called investment trusts. We will use the two terms interchangeably below.) As we saw in Chapter One, in 1998 Japanese individual financial assets were overwhelmingly held in bank deposits and savings-type guaranteed-rate insurance products. Stocks and bonds made up a paltry 6 percent of individual financial asset portfolios, and mutual funds accounted for only 2 percent (Figure 1.5). Not only was this a very small relative and absolute number, it was substantially lower than it had been a few years earlier. In other words, for a decade, Japanese individuals had been steadily disinvesting in mutual funds. Mutual funds were unpopular and poorly understood.
