Changes in Japan’s asset management sector are leading more money to flow through funds set up in the Cayman Islands.
That’s according to a report from Maples Group, which said record household savings and renewed policy support for investment are sending more capital abroad.
Cayman unit trusts remain the main vehicle for Japanese investors looking to access international private markets.
These unit trusts account for roughly 65% to 70% of Japan’s overseas fund investments and foreign investment trust registrations, the report says.
Japanese distributors continue to favour the unit trust format for several reasons – and as evidenced by Maples’ own recent deals.
They are familiar to investors, qualify for Japanese tax purposes, and can handle semi-liquid or ongoing investments without causing problems for domestic institutions’ balance sheets.
Cayman unit trusts are often the gateway to some of the world’s largest private markets funds, including those managed by Blackstone, KKR, Apollo, EQT and Carlyle.
Market forecasts suggest that by 2027, Japanese retail and high-net-worth investors could have allocated more than US$100 billion to alternative investments.
This aligns with the government’s goal to double household investment income over the same period, the report says.
While Cayman remains the main access point, Japanese capital is increasingly flowing through multiple other jurisdictions.
Luxembourg and Ireland are playing growing roles in delivering private markets strategies, providing governance, infrastructure, and platforms for underlying funds.
The shift reflects changes in Japan’s distribution channels, regulatory expectations, and the globalisation of investment products, the report adds.
Despite this growth, Japan’s private markets expansion is still in its early stages.
