TOKYO -- Publicly offered investment trusts have been drawing in loads of cash in Japan, with their net asset balance rising to a record of around 102.6 trillion yen ($951 billion) at the end of August.
The figure tops the previous record of 102.4 trillion yen reached in May 2015. The Bank of Japan's aggressive asset purchasing has played a key role. And the accelerating shift among retail investors from bank savings to asset formation also appears to have contributed.
Exchange-traded funds, which includes those linked to stock indexes, have seen the biggest inflow of money among all types of investment trusts over this period of more than two years. The ETF asset balance reached 25.8 trillion yen at the end of August, a roughly 80% jump from May 2015. The BOJ bought 10.5 trillion yen worth of ETFs over the period.
Another supporting factor has been an increase in steady investments by working-age individuals. More and more people under age 60 are putting fixed amounts of money into investment trusts each month. Investing with a long-term horizon, this cohort is unlikely to redeem funds quickly. This shift in behavior is therefore likely to support a stable expansion of the investment trust market.
The asset balance of funds that diversify investments among stocks, bonds, real estate and other vehicles reached 7.3 trillion yen at the end of August, up nearly 20% from May 2015.
In the past, many elderly investors in Japan would redeem funds to lock in profits when asset prices rose, putting the brakes on the rise of asset balance of investment trusts.
But for the three months through August of this year, individual investors in Japan were net buyers of investment trusts even as stock prices remained high around the globe. The steady investment by the working-age population appears to have offset redemption by seniors.