Japan looks set to exceed the 2006 high watermark in terms of startup numbers this year, with 27 expected to be launched by year-end. 2006 recorded 25 startups. To date, 15 funds have already launched this year with notable examples being ex-Goldman Sachs prop trader, Tan Maruyama’s R Squared Master Fund and the Orix Commodities Fund, a CTA strategy focusing on commodity futures rolled out by GCI Asset Management and Orix Investment Corp. Of note is the fact that strategies in Japan are starting to diversify. Historically, its alternatives industry has been dominated by equity l/s strategies (over half) due to many fund managers coming from mutual fund backgrounds. This has caused industry AUM to decline 65 per cent since 2006 to USD13.6 billion: between end-October 2007 and 19^th October 2010 the Nikkei 225 had fallen 57 per cent from 16737 to 9539. More event-driven, credit and macro strategies will likely continue to launch in Japan but it doesn’t disguise the fact that making money there is still tough for alternatives. Year-to-date they’re now the region’s laggards: up slightly +0.71 per cent in September to leave them +0.57 per cent ytd. According to Bloomberg, however, the recently launched Hareion Fund, a Japan-focused fund established in Hong Kong by Giselle Leung and Einoshin Arima (ex-Mizuho Securities prop traders) last month was already up 5% as of Oct 8^th. Commenting on this year’s startups, Rory Kennedy, COO of Tokyo-based Rogers Investment Advisors KK, told Bloomberg: “Many of 2010’s crop of Japan-focused managers generally do not believe that they know better than the markets; they seek to ride the tiger instead of trying to tame it to make money in the world’s most difficult market.”