Japanese equity fund flows in Europe turned net positive in April, registering €500m ($561m) in net new money across mutual funds and exchange-traded funds (ETFs), according to findings in Cerulli Associates’ latest report entitled ‘The Cerulli Edge – European Monthly Product Trends’.
The report further showed that Japan was the best equity sector for net new flows in May, after global equity large cap.
For reference, active Japan equity funds took in €2.3bn, while passive flows trailed at €400m.
To this end, net inflows into actively managed products came in at €4.2bn across May and June, compared to €900m into passive products.
Interestingly, 145 asset managers had expressed mixed views about the demand potential of Japan equity funds at the start of 2023, Cerulli’s report said.
“Around a fifth of our managers included Japan in their top three equity sectors for future demand for active and index mutual funds (19% and 20% respectively); 29% did so for ETFs,” Fabrizio Zumbo, director of wealth management research in Europe, said.
Nevertheless, it seems like managers are considerably more bullish about the global equity, global emerging market and China equity sectors, according to the report.
As a point of comparison, 34% of the asset managers polled expect China to be one of the most in-demand equity sectors in the active fund space for 2023–2024.
Even so, Chinese equity funds had experienced net outflows in May and June, unlike Japanese equities, which started to attract the attention of foreign investors thanks to rising stock prices.
The Nikkei 225 was up 27% in the first half of 2023, making it the second-best performer among the major market indices for the six-month period, not far behind the Nasdaq.