In July, Japanese equity funds experienced a significant surge in inflows, reaching a record ¥1.92 trillion ($13.1 billion) as investors took advantage of lower stock prices ahead of a sell-off in August. This marked a sharp increase from June, where inflows into Japan equity funds were only ¥6.9 billion. The data from Morningstar Direct highlights a notable trend of investors returning to Japanese stocks, particularly in the large-cap sector.
The inflows were predominantly focused on large-cap stocks, which saw a rise to ¥82.7 billion in July from ¥67.7 billion in June. However, small and mid-cap stocks did not fare as well, with outflows increasing slightly to ¥22.3 billion in July from ¥21.7 billion the previous month.
Global markets also saw substantial inflows, with world equity funds recording a record ¥1.53 trillion in July. This was driven mainly by investments in global, North American, and European equities, while emerging markets and Asia and Oceania saw relatively lower inflows.
In contrast, bond funds had a quieter month. Inflows into Japan bond funds were ¥23.9 billion, slightly down from ¥28.1 billion in June, while world bond funds remained stable at ¥45.6 billion compared to ¥42.8 billion in June.
Real estate investment trusts (REITs) continued to see outflows, marking the third consecutive quarter of declines, with ¥65 billion in outflows recorded in July.
This shift in investment patterns indicates a cautious yet opportunistic approach by investors, who are capitalizing on market fluctuations and rebalancing their portfolios amidst varying market conditions.
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