Money trusts & Loan trusts

Money trusts

There are various types of money trusts categorized by their purpose. The following list describes standard products used by individuals at trust banks and other institutions.

	Joint management designated money trust (general)	Hit(One-Month-Redeemable joint management designated money trusts)	Joint management designated money trust with performance-based distribution
Trust amount	At least 5,000 yen in 1 yen units	Varies by bank. At least 100 yen in 1 yen units to at least 100,000 yen in 10,000 yen units	Determined at time of subscription (Generally, at least 1 million yen)
Principal compensation contract	Yes	No	No
Term	At least 1 year In unavoidable circumstances, the trust can be cancelled on payment of a fee during the term of the trust.	Not fixed (but with a one-month grace period) In unavoidable circumstances, the trust can be cancelled on payment of a fee even during the grace period.	Depends on the product (many are 3 to 5 years) In unavoidable circumstances, the trust can be cancelled on payment of a fee during the term of the trust.
Disclosure of distribution rate	The planned distribution rate shall be disclosed.	The planned distribution rate shall be disclosed.	Not disclosed because distribution is based on performance
Payment of earnings	Twice a year, in March and September, with ability to invest compound interest	Twice a year, in March and September, with ability to invest compound interest	Certain trusts have structures by which the distribution is calculated and paid in each period, and in others, the entire payment is made in a lump sum at the termination of the trust.
Tax	20% withholding tax on payments deemed to be interest income
Qualifies for deposit insurance system	Yes	No	No

*: In addition to income tax, the special income tax for reconstruction (0.315%) shall be withheld at the source on interest payments made paid from January 1, 2013 through December 31, 2037.

Loan trusts

Loan trusts are trusts established in accordance with the Loan Trust Act, whereby trust banks invest funds from great number of settlors, mainly in long-term loans, and pay the profits on the invested principal.
Loan trusts were used as a savings product for a long time. However, there are no new subscriptions at this time because the diversification of clients' needs for asset management during recent years led to a decline in the popularity of loan trusts.