Japanese mutual funds posted their highest ever monthly investment gains in February, helped by a strong recovery in global stock markets and the yen’s fall, but equities funds continued to see net outflows for a fifth straight month.
Outflows from Japan domiciled equities mutual funds may have accelerated during the month as retail investors likely squared off their exposure to equities funds after seeing a strong recovery in prices, said Investment Trusts Association vice-President Fumio Inui.
He said investors had become nervous about exposure to risk assets after seeing severe monthly investment losses many times last year.
Investment trust funds, a type of mutual fund known as toushin, recorded an investment gain of 3.65 trillion yen ($44.39 billion) in February, nearly three times the 1.35 trillion yen gain posted a month earlier.
That pushed up the overall asset value by 6.1 percent or 3.6 trillion yen to 62.29 trillion yen – the highest level since July last year.
Market participants closely watch the Japanese mutual fund market because of its size, the eighth-largest in the world and bigger than the economy of Turkey.
“The toushin market benefited from a strong recovery in global markets,” Inui told a news conference.
He said prospects for the US economy had brightened, pushing New York shares higher after strong jobs data in February. The Bank of Japan’s surprise monetary easing measures and improvement in Europe’s debt crisis had helped the market.
Japan’s benchmark Nikkei stock average rose more than 10 percent in February, while the Dow Jones industrial average rose 2.5 percent.
The yen weakened across the board, down nearly 6 percent against the dollar and 8 percent against the euro during the month.
Still, Inui said the association was concerned about seeing steady outflows from equities funds.
Japan-domiciled equity investment trust funds posted net outflows of 224.1 billion yen in February, up from net outflows of 151 billion yen a month earlier.
That marked a fifth consecutive month of net outflows, the longest since 1997, which saw outflows in the six months between February and July.
“We are seeing some bright signs, although we’ll be carefully watching trends in coming months,” Inui said.