Bloomberg | Highland to Open Tokyo Office

  • Dallas-based asset manager to open Tokyo office in April 2016
  • Highland to sell fixed-rate products to Japanese pensions

Highland Capital Management, which has $22.1 billion under management, plans to open an office in Tokyo to tap demand from Japanese pension funds and institutional investors seeking to diversify investments as they chase higher returns.

The Dallas-based asset manager will open its office in the Japanese capital in April and relocate Paul Adkins, managing director of business development, from Singapore, Terrance O. Jones, president of institutional products, said in an interview Tuesday. Highland is in talks with several pension funds and plans to offer a fixed-rate product that provides a stable three-year fixed-rate of return, he said.

There is enormous demand among Japanese pensions for fixed-rate products, Jones said.

“It is a product, it is a currency and it is an economic differential that is a good dynamic to provide to Japan right now because the interest-rate environment in the U.S. is diverging Japan,” Jones said.

A shrinking population and a record number of people over 65 years have prompted changes in one of the world’s largest pension-fund markets as payouts for an aging population mount. Japan’s Government Pension Investment Fund, the world’s biggest, and other pensions are seeking to diversify their investments and generate stable returns. That comes as the U.S. Federal Reserve has signaled it may lift interest rates, while Japan’s rates are expected to remain low.

“There are a lot of changes in the Japanese market,” Jones said. “We are working with some big financial institutions and we think it’s a big enough opportunity that we are going to invest in moving to Japan.”

Highland, which was founded by Jim Dondero and Mark Okada in 1993, specializes in credit strategies, such as credit hedge funds, long-only funds and separate accounts, distressed and special situation private equity, and collateralized loan obligations, according to its website.

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