Translated from an article originally published in Ma-Do magazine vol. 65, February 2022.

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 2022.

 

 

Cash flows for openly sold toshin funds* in January were a net positive of JPY 717 billion.  Although down from nearly JPY 1 trillion (982 billion) in December, inflows to the toshin market remained strong.

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

Foreign stock funds continued as the primary market driver and accounted for JPY 473 billion of the January inflows.

Among other fund types, multi-assets have experienced stable inflows.  Domestic stock funds saw the second largest inflow after foreign stock funds, at about JPY 153 billion, but this is thought to be due to the weak domestic stock market.  Speculative funds abound.  On the other hand, emerging stock and foreign bond funds saw outflows, though not in large amounts.

 

TOP 10 BEST-SELLING FUNDS (January 2022)

  Fund Name Provider

Inflow Amount
(million yen)

1.

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

AllianceBernstein

124,258

2.

eMAXIS Slim US Equity S&P500

MUFG AM

59,087

3.

Fundsmith Global Equity Fund

AM One

44,479

4.

Nikkei 225 No-Load Open

AM One

33,831

5.

AllianceBernstein US Growth Stock Fund B Course, JPY unhedged

AllianceBernstein

29,968

6.

eMAXIS Slim All World Equity (All Countries)

MUFG AM

28,975

7.

SBI・Vanguard・S&P500 Index Fund

SBI

25,583

8.

Rakuten US Stock Index Mother Fund

Rakuten

21,185

9.

Global Robotics Equity Fund (biannual settlement type)

Nikko AM

19,279

10.

Manulife Yen Hybrid Bond Income Fund (annual settlement type)

Manulife

17,817

Among individual funds, AllianceBernstein US Growth Stock Fund D Course, monthly settlement (JPY unhedged) topped the list for the January inflows.  Excluding temporary inflows to limited open-end funds, the fund is far and away the top selling toshin.  In second place was eMAXIS Slim US Equity S&P500, which has continued to see stable inflows despite the somewhat unstable US stock market, perhaps due to the large number of accumulation investments by installment.  These two funds are ranked 1st and 2nd in annual inflows for 2021.

Third place went to the Fundsmith Global Equity Fund, which was launched in December last year with  JPY 118.5 billion, making it the second largest fund in 2021.  Inflows to the newly launched fund continued In January.

Of the top 10 best-selling funds in January, eight were foreign equity-type funds, demonstrating their overwhelming popularity.  However, MAB Fund Analyst Yohei Shimegi cautions, “The US stock market, which has been rising at a steady pace, is beginning to show signs of a change in direction.  This is a major concern.  The cash inflow has been so skewed toward foreign stock funds that if the stock market were to plummet, there would be a risk of a sudden outflow.”

Atsushi Ohno, Chief Fund Analyst at MAB, also noted that “Never before has there been a period of such strength in foreign equity funds.  That said, it is time to start thinking about diversification.  We have been biased toward index and growth stock funds among foreign stock types, so simply having a value stock fund, in addition to combining other categories, should have a diversification effect.”  In this regard, the 11th-ranked fund in January, Fidelity Global Undervalued Growth Equity Fund B Course (unhedged), may be a fund to watch.

Among funds suffering outflows were the top-ranked Global Prospective Fund and the 2nd Global ESG High-Quality Growth Equity Fund (unhedged).  Both were among the top inflow funds until about a year ago.  Global ESG was ranked No.1 in the annual inflow of 2020.  It is dismaying that the bias toward the Global ESG fund has reversed so quickly, as the concept of ESG is premised on long-term investment.  If the global trend in ESG investment were to prove a mere fad, the maturity of Japan's toshin market could be questioned.  The market should be watched closely.

 

 

< Toshiaki Kikuchi >