Translated from an article originally published in Ma-Do magazine vol. 57, February 2020.

Investment Japan will report quarterly on Japan’s toshin (investment funds) market based on data provided by the Mitsubishi Asset Brains Co., Ltd. (MAB).
Data referenced in this second report is current as of January 2020.

 

 

Cash flows for openly-sold funds* in January 2020 equaled a net positive of JPY 131 billion.  The market breathed a sigh of relief after 4 consecutive months of losses since September and a net outflow for 2019.

* Public offering investment funds excluding ETF, defined contribution-only, separately managed account-only, and bond investment trusts.

Domestic stock funds saw outflows, while index funds bucked the trend, attracting investors trading against the trend in well-timed buying.  Foreign stock funds and multi-asset funds led the inflows, with a few foreign funds concentrating cash.

Among individual funds, Global 3 Times Triple Funds stood out with strong sales, placing first among annual settlement funds and third among bi-monthly dividend payers.  These funds are spurring a new category of leverage-type balance fund, as similar types of funds are being set up.  This innovation represents one of the few bright spots in the sluggish toshin market.

Multi-asset funds maintained inflows throughout 2019, led by Tokio Marine Yen Asset Balance Fund and Global 3 Times Triple Fund.  “We moved Global 3 Times Triple Fund from the ‘others’ category to ‘multi-asset’ this year.  Although its risk-return characteristics are different from other balanced funds, it exhibits multi-asset traits in terms of investment outlets,” said Yohei Shimegi, Fund Analyst at MAB.  As a result, multi-asset inflows for 2019 swelled after being applied retrospectively.  It was a fresh product that made an impact on the toshin market.

Among individual funds, Pictet Global Income Equity Fund (monthly dividend) was the top among best-selling funds for January, reaching over JPY 1 trillion in AUM.  It was a predominant fund of the day.  It is quite unusual in the Japanese market to see a fund regain momentum 15 years after its introduction.  The 2nd best-selling fund was the Next Generation Connectivity Fund.  The T. Rowe Price US Growth Stock Fund, whose introduction was major news in December, was the third best seller.

TOP 10 BEST-SELLING FUNDS (January 2020)

  Fund name Provider

Inflow amount
(million yen)

1. Pictet Global Income Equity Fund (monthly dividend) Pictet   64,445
2.

Next Generation Connectivity Fund (annual settlement) 

SMTAM 54,131
3.

T. Rowe Price US Growth Stock Fund (American Royal Road)

T. Rowe Price   45,282
4.

Global 3 Times Triple Fund (annual settlement)

Nikko AM 36,366
5.

Alliance Bernstein US Growth Stock Fund D-course    (monthly dividend) unhedged

Alliance
Bernstein
22,337
6.

Global 3 Times Triple Fund (bi-monthly dividend)   

Nikko AM 19,580
7.

Man AHL Smart Leverage Strategy Fund  

Daiwa AM  18,740
8.

Risk Control Global Asset Diversified Fund   

AM One 17,929
9.

Nikkei 225, open-end, no load 

AM One   16,005
10.

Tokio Marine Yen Asset Balance Fund (monthly dividend)   

TokioMarine 15,977

Stock funds, particularly thematic funds, experienced major outflows. Hifumi Plus by Rheos Capital Works stood out with an outflow of nearly JPY 20 billion.  As an offering from an independent asset management company, Hifumi Plus is unique, but it now faces a crucial moment as it racks up JPY 100 billion in outflows over the last 6 months.

The top 10 best-selling funds are dominated by multi-assets and foreign stock funds.  Atsushi Ohno, MAB’s Chief Fund Analyst, noted that investors preferred straightforward ones.  “Investors are choosing well-diversified balance funds and funds investing in solid-performing US stocks.  If you look back at their almost exclusive devotion to thematic funds not so long ago, it is a healthy trend.”

The 2019 toshin market saw net outflows due to profit-taking when market conditions were favorable.  Will 2020 see a return to stable long-term investing with orthodox funds?  We will keep our eyes open as the market undergoes a turn.

 

 

< Toshiaki Kikuchi >