(Bloomberg) -- Blackstone Inc.’s first-ever private equity fund for Japanese individual investors raised $1.2 billion just four months after its launch, adding to signs that people in the Asian nation are warming to alternative assets.
The dollar-denominated Blackstone Private Equity Strategies Investment Trust reached that amount at the end of June, according to figures from the Japan Securities Dealers Association.
Alternative investment products, which refer to assets other than stocks and bonds, have historically been unpopular in Japan because of their low liquidity. That’s starting to change as the government encourages individuals to invest more of their cash, the value of which is eroding as inflation takes hold in Asia’s second-biggest economy.
“Japanese individual investors are highly interested in alternatives and their understanding of the asset class is deepening,” said Kaoru Fujita, a Tokyo-based managing director at Blackstone.
Nomura Holdings Inc., Daiwa Securities Group Inc. and SMBC Nikko Securities Inc. have been selling the fund, mainly to wealthy individuals. The minimum investment amount is $50,000 (¥7.8 million), much higher than the typical ¥10,000 in the local investment trust industry.
“Individual investors’ needs for new private products that are different from traditional assets such as stocks or bonds are increasing, and the inflow of funds is continuing,” said Yuji Kumata, a spokesman for Daiwa.
Others are joining the fray. In August, SBI Holdings Inc. plans to launch a fund with a minimum investment of just ¥100 in collaboration with the UK’s Man Group. In February, Canada’s Brookfield Corp. launched a fund that invests in unlisted real estate investment trusts.
Blackstone entered the retail investment business in Japan in 2021. Its other alternative products in the nation include a $252 million fund targeting unlisted US REITs and a $580 million private credit fund that lends money to US companies, JSDA figures show. These products have been on the market for more than a year and only have one distributor in Japan.
“By incorporating some private assets into a portfolio of traditional assets, investors can aim to improve its profitability,” said Mitsuru Takahashi, managing director of the product development and planning department at Nomura’s securities unit, which distributes Blackstone’s PE and REIT funds.
According to Takahashi, the lower liquidity of private assets makes them less sensitive to short-term market fluctuations than stocks and bonds.
One reason why alternative products are selling well in Japan is that they are denominated in dollars, said Shoko Shinoda, a fund analyst at Rakuten Securities Inc. Such products can be a receptacle for domestic investors who have dollar assets and need a place to invest them while the yen continues to depreciate, according to Shinoda.
Still, she added that individual investors lack knowledge of the differences between global funds, and sellers need to be able to explain these to them.
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