Translated from an article originally published in Ma-Do Magazine Vol. 61, February 2021.

Investment Japan reports quarterly on Japan’s toshin (investment funds) market, based on data provided by Mitsubishi Asset Brains Co., Ltd. (MAB). Data referenced in this report is current as of January 2021.

 

Cash flows for openly-sold toshin funds* were a net positive for 2020 of JPY 1.945 trillion.  Inflow was driven by foreign stock funds, which ended the year with a net positive of JPY 3.7023 trillion.  REIT funds, the next most successful category, attracted only JPY 332.8 billion inflow.  Clearly, foreign stock funds were the toshin market’s main support in 2020.

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

Domestic stock funds, on the other hand, suffered a net negative of JPY 1.3473 trillion in 2020, the second year in a row for outflows greater than JPY 1 trillion.  Domestic stock funds provided the best returns among toshin, solidifying the trend of selling on price increases.  According to Atsushi Ohno, Chief Fund Analyst at MAB, “It seems that many investors see Japan’s potential growth as limited in the long term.  Even if true in the aggregate, certain individual companies continue to grow.  By selecting and investing in such companies, active fund managers can show their skills.  Several funds substantially outperformed benchmarks last year, even while experiencing cash outflows, which presents a major challenge for the asset management industry.”

The best-selling funds in 2020 were Global ESG High Quality Growth Stock Fund (unhedged) with an initial setup of JPY 383 billion, followed by Digital Transformation Stock Fund, and AllianceBernstein US Growth Stock Fund D Course (monthly dividend, unhedged).  All three of the top selling toshin are foreign stock funds.

 

TOP 10 BEST-SELLING FUNDS (2020 in total)

  Fund Name Provider

Inflow Amount
(million yen)

1.

Global ESG High Quality Growth Stock Fund, JPY unhedged

AM One

790,466

2.

Digital Transformation Stock Fund

Nikko AM

381,533

3.

AllianceBernstein US Growth Stock Fund D Course (monthly dividend), JPY unhedged

AllianceBernstein

307,116

4.

Sommelier for Investment

AM One

204,596

5.

Tetra Equity

SMD-AM

186,327

6.

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

T. Rowe Price

183,407

7.

netWIN GS Technology Stock Fund B Course, JPY unhedged

GS

171,328

8.

AllianceBernstein US Growth Stock Fund C Course (monthly dividend), JPY hedged

AllianceBernstein

169,505

9.

GS Future Technology Leaders B Course, JPY unhedged

GS

160,133

10.

Pictet Global Income Equity Fund (monthly dividend)

Pictet

159,887

In January of 2021, cash flow for openly-sold funds were a net positive of JPY 453 billion.  This inflow was also driven by foreign stock funds while domestic stock funds once again ended with a net negative.  These trends have held since July 2020, with some fluctuation in the levels.

January’s top-selling fund was Digital Transformation Stock Fund, which was also the second-best seller annually for 2020.  January’s second-best seller was Global Prospective Fund, another foreign stock fund.  2020’s top seller, Global ESG High Quality Growth Stock Fund (unhedged), ranked third for January.  Only the fourth-best seller, Sommelier for Investment, was a multi-asset fund.  The remaining nine funds in January’s top 10 were foreign stock funds, indicating a significant bias.

Among January 2021’s top ten, relatively orthodox funds like AllianceBernstein US Growth Stock Fund Series and long-term oriented funds like AllianceBernstein Global SDGs Equity Fund (asset growth type) stick out.

 

TOP 10 BEST-SELLING FUNDS (January 2021)

  Fund Name Provider

Inflow Amount
(million yen)

1.

Digital Transformation Stock Fund

Nikko AM

50,363

2.

Global Prospective Fund

Nikko AM

49,796

3.

Global ESG High Quality Growth Stock Fund, JPY unhedged

AM One

45,173

4.

Sommelier for Investment

AM One

34,940

5.

Next Generation Connectivity Asia Fund (THE ASIA 5G)

SMTAM

30,888

6.

AllianceBernstein US Growth Stock Fund D Course (monthly dividend), JPY unhedged

AllianceBernstein

25,042

7.

Global Robotics Equity Fund (biannual settlement type)

Nikko AM

24,123

8.

AllianceBernstein US Growth Stock Fund C Course (monthly dividend), JPY hedged

AllianceBernstein

23,232

9.

AllianceBernstein Global SDGs Equity Fund (asset growth type)

AllianceBernstein

20,864

10.

eMAXIS Slim US Equity S&P 500

MUKAM

19,518

“Last year was the first to see ESG investment in earnest in Japan.  This year could see such investments take root and expand,” said Yohei Shimegi, Fund Analyst at MAB.  “I see signs of the investor base expanding.  There is stable cash inflow to ESG funds such as eMAXIS Slim US Equity S&P 500 and ESG-aligned installment-type NISA (Nippon Individual Savings Account) funds.  The number of investors who continue to invest in installment-type funds in the wake of COVID-19 disruption is steadily increasing.”

Although the inflow bias toward foreign funds is a concern, there are positive factors.  We may see healthy growth in the toshin market become steadier in 2021.

 

 

< Toshiaki Kikuchi >