Japanese Investors' Appetite for Alternatives Increases

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HFA Staff
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In March and April 2014, a survey was conducted by AIMA Japan and Eurekahedge to gauge important insights into market sentiment, investment trends and key regulatory challenges facing the Asian asset management industry; with a particular emphasis on the outlook for Japan. The 131 respondents who contributed their insight hailed from various financial sectors – a 39% majority from investment advisory, 14% from banking, 15% from consultancy and 11% from hedge funds, with the remainder from family offices, insurance companies, asset management, trust banks and pension funds.

Japanese Investors' Appetite for Alternatives Increases
Source: Pixabay

Japanese investors still bullish

Notable results from the survey, which were calculated on an average basis from the respondents, showed that Japanese investors remain bullish on the prospects of the Japanese economy, with 72% of survey respondents hopeful that Abenomics will continue to yield positive results in 2014. For the Nikkei 225, 72% expected it to finish 2014 above the 15,000 mark with 51% believing it will be higher than 20,000 by the end of the 2014. Likewise, only 8% thought it would fall below 100, while 44% estimate it would be between 100 – 105, and the remaining 48% expects it to be higher than 105 by the end of this year. Almost 70% of investors expect JGB yields to remain below the 1% mark based on their expectations that the Bank of Japan (BoJ) will continue to maintain its current level of bond buying.

In terms of the investment trends, approximately 80% of the Japanese investors preferred not to change their allocation of instruments in their portfolios, as well as their JPY against non-JPY asset ratios.

Other findings from the survey found that investors plan to increase their allocations to Global, Asia ex-Japan and Middle East/Africa mandated funds, while trimming their portfolio exposure to Latin America and Europe. Their exposure to Japan would be maintained at the current level.

Investors intend to increase their exposure to long/short equities

Furthermore, survey results found that investors intend to increase their exposure to long/short equities and event driven strategies while curtailing exposure to CTA, macro and fixed income strategies. Ranked high on a list of anxieties were regulatory challenges such as increased J-FSA inspections, and the Dodd-Frank Act. Amongst the geopolitical and economic issues, China was the topic that ranked first in the list of concerns going forward, followed by interest rate volatility triggered by the Fed’s QE phase out.

For the full results of the survey, please head over to the Eurekahedge website (http://www.eurekahedge.com/AIMA_Japan_Eurekahedge_Survey) to find out more. The full survey results and analysis are available to AIMA’s and Eurekahedge’s subscribers and the survey participants only.


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The post above is drafted by the collaboration of the Hedge Fund Alpha Team.

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