2004 Press Releases

FOLIOfn And Nikko Partner To Create First Separately Managed Account Program To Be Marketed In Japan


VIENNA, Virginia – FOLIOfn, Inc., an innovative online brokerage and financial services technology firm, said today that it has formed a partnership with Nikko Cordial Corporation, one of Asia’s largest financial services groups, that will enable Nikko to use FOLIOfn’s advanced portfolio management and trading technology to create and market the first separately managed account programs ever to be offered in Japan. Nikko will launch its marketing effort for the separately managed account offering, to be called “Premier-port,” in April.

FOLIOfn’s portfolio management and trading technology will provide the systems backbone for Premier-port, which Nikko estimates will be at least a $20 billion business in ten years. The Web-based, portfolio management technology allows mass customization of client accounts, which can be linked to multiple investment models, enabling thousands of accounts to be efficiently managed by a single financial advisor. Additionally, all accounts managed in the system can be customized, for example, for specific security exclusions, tax strategies or other reasons.

Steven M. H. Wallman, CEO and Founder of FOLIOfn, said, “Our patented platform is now the first that allows for the seamless integration of equities and funds in one or multiple manager run models within a single account. While the program sponsor or advisor is now able to offer the most cost efficient and comprehensive managed investment program in the industry, the real winner is the client—who is provided with a customized investment solution at a fraction of the cost of traditional programs.”

“We conducted a worldwide search for a technology platform for Premier-port, and we have chosen FOLIOfn’s system for its flexibility, innovativeness, ease of integration and scalability,” said Nikko Cordial Advisors Chief Executive Officer Yoshishige Saigusa. Nikko Cordial Advisors, Ltd., an investment advisory company, is a new Nikko subsidiary that has been created to direct Nikko’s managed accounts business, and is licensed to use FOLIOfn’s technology in Japan.

“We are very pleased that our technology was chosen as the lever to open this new market in Japan,” said FOLIOfn Chairman and Chief Executive Officer Steven M.H. Wallman. “Nikko is a visionary company, and we are excited to be partnering with them in this venture that, we believe, will change the securities marketplace in one of the world’s largest financial markets.”

Nikko will market Premier-port through Nikko Cordial Securities, Inc., one of Japan’s largest, full-service securities companies, which offers investment products and services to individual investors. Nikko Cordial Securities also will establish Premier-port Advice Centers in its retail facilities to market and service Premier-port separately managed accounts.

“We are targeting a range of affluent investors, from the ‘mass affluent’ to ‘high net worth’ investors,” Saigusa said. “These are people who want a more individualized managed investment vehicle than a mutual fund, and we believe Premier-port will provide the combination of customization and sophisticated investment management they are seeking.”

Nikko’s commitment to making separately managed accounts an important part of its business is underscored by the fact that the company has joined the Washington D.C.-based Money Management Institute, the trade association for the managed accounts industry, and has become its first international member.

In the United States, separately managed accounts are achieving popularity with the same affluent market segments, and realizing faster sales growth than mutual funds. According to Boston-based Financial Research Corporation, assets in separately managed accounts increased by 29 percent in 2003, while mutual fund assets increased 25 percent.

The efficiency of FOLIOfn’s portfolio management technology, its fractional shares trading capability and its “window trading” system, which dramatically lowers trading costs by internally aggregating and netting all trades in a given security from all accounts, allow separately managed accounts to be cost-effectively offered to a broader range of investors than previously has been possible. These investment vehicles traditionally have been limited to high net worth investors.

Adapting FOLIOfn’s system for Nikko’s Premier-port program required innovative solutions for a number of significant challenges. For example, FOLIOfn created a generic Application Programming Interface to allow its technology to interface with Nikko’s existing portfolio accounting system. The “front-end” of FOLIOfn’s system had to be adapted to accommodate Kanji, the Japanese alphabet system of approximately 2,000 characters.

FOLIOfn also added the ability to short-sell securities to accommodate mixed “long-short” models planned for the separately managed account program. The company adapted its system to accommodate Japanese securities and currency, and other functions were made to satisfy the demands of regulators and Japanese investors. The pages of the Web-based system were given a look-and-feel, and navigation reflecting Nikko’s branding and operational needs. FOLIOfn also trained Nikko’s IT developers to equip them to launch and maintain the system.

“The task was very comprehensive,” Wallman said, “but it was made much easier by the fact that our system is Web-based and totally agnostic in its ability to support any language, security type or currency. This capability was extremely important to Nikko.”

FOLIOfn’s technology currently is being used by more than 800 financial institutions on either a turnkey platform or licensed basis.

“In the licensing arena, we’re seeking and forming alliances with domestic and international partners who can provide scale, access to important markets and other strategic advantages,” Wallman said.

About Nikko Cordial Corporation

Nikko Cordial Corporation (www.nikko.jp), a company whose shares are traded on the Tokyo, Osaka, Nagoya, Frankfurt, Düsseldorf, Luxembourg, Euronext (Paris) and Singapore stock exchanges, is one of the largest financial corporate groups in Japan offering total financial services with a focus on securities services. The company was established as a new corporate group providing innovative and comprehensive financial solutions in October 2001, when Nikko Securities Co., Ltd. was reorganized into a holding company after over 80 years since its foundation. Goals of Nikko Cordial Corporation are to strengthen ties with customers by proactively offering cutting-edge financial technology, introducing new products and services.

Nikko Cordial Advisors, Ltd., an investment advisory company, is a new Nikko subsidiary that has been created to direct Nikko’s managed accounts business. We will launch our separately managed account product, which will be named “Premier-port”, in April 2004.

About Folio Investing

Folio Investing, a division of FOLIOfn Investments, Inc., is an online brokerage that enables investors to manage stocks, ETFs, and mutual funds as integrated investment portfolios called “Folios” that deliver better control, greater transparency, and lower cost. Investors can create their own Folios, much like creating personalized ETFs or mutual funds, or invest in over 100 Ready-to-Go Folios representing market indices, sectors, geographical regions, target dates, and more. The Folio Unlimited Plan features unlimited commission-free trading in twice-daily windows for only $29 a month or $290 a year. Ready-to-Go Folios can be managed or unmanaged, are not registered investment companies, and are offered by FOLIOfn Investments, Inc., a registered broker-dealer. FOLIOfn Investments, Inc. does not provide investment, tax, or legal advice. FOLIOfn Investments, Inc., is a member of FINRA/SIPC.