Japan's ITC Investment Partners has entered the Japanese structured products market with the issue of two call-overwriting funds.

The launch of its call overwriting products comes as the style of payoff is set to gain traction in the Japanese marketplace.

The issuance of general funds once dominated the Japanese market with 133 funds striking in 2007.  The following three years saw annual issuances slide from 124 to 74 and 25, respectively.

Market activity this year took a major blow due to the March Tōhoku earthquake and tsunami, followed by further dips due to US and European debt concerns, but a cautious recovery is beginning to gain momentum.

Investors are still relatively risk adverse, making call-overwriting products attractive because of their decreased risk of stock ownership. In terms of call-overwriting funds, 19 have been issued this year compared to only three in 2010, with 14 already having struck and the remainder to do so in January.

A newcomer to the structured product marketplace, ITC Investment Partners Corporation was made a subsidiary of general trading firm Itochu Corporation in 2008 and is the parent company's asset management wing covering financial products such as shares and bonds to commodities, insurance and real estate.

ITC obtained approval from the Financial Services Agency in May 2009 to invest in commodity futures, and had set up the first Japanese registered investment trust in July of the same year to make direct investments in West Texas Intermediate crude oil futures, an international indicator of the price of crude.

ITC's initial structured product offerings are the three-year growth and income funds High Income BRL and High Income JPY.

They are linked to a basket of Japanese shares aimed at gaining exposure to the movements of Japanese Shares High Income Strategy Index (BRL or JPY) by investing in JPY-denominated bonds issued by Deutsche Bank in Europe.

It offers a monthly coupon based on the premiums of call options generated on the underlying portfolio (call overwriting strategy) while the net asset value of the fund is linked to the performance of its underlying.

The products will be distributed by Rakuten Securities and is available until 12 January 2012.

This product appears on the Japan database.