Japan equity mutual funds see outflows as weaker yen prompts sales

TOKYO Thu Jan 17, 2013 4:16am EST

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TOKYO Jan 17 (Reuters) - Japanese equity mutual funds suffered a net outflow for a second consecutive month as retail investors rushed to lock in profits, reflecting sharp recoveries in domestic equity prices and the weakening of the yen.

Still, strong investment performance helped boost the overall asset value of domestic mutual funds, or investment trust funds known as toushin, in December.

The overall value rose 5.2 percent in December from a month earlier to a one and a half-year high of 64.1 trillion yen ($724.33 billion), the Investment Trusts Association said.

Japan's mutual fund market is the second-largest in the Asia-Pacific region after Australia and the eighth-largest in the world, but less than 4 percent of the country's massive household savings of $17 trillion are invested in the market.

Equity funds saw a net outflow of 133.5 billion yen ($1.51 billion) in December, the first consecutive monthly outflows since March.

"Investors appeared to have locked in their profits or may have squared off their positions as domestic shares rose sharply during the month," Fumio Inui, vice president of the association, told a news conference.

"These kind of moves are very common among Japanese retail investors in the share market and it's the same in the fund market too," Inui said.

Nikko Asset Management Was caught by a surprise net outflow from one fund in December after investors earlier piled into another. Japanese investors poured about $2.3 billion in the Nikko Gravity fund, which mainly invests in U.S., Mexico and Canada shares. But JP Morgan's Nikko JF Asia Discovery fund suffered an outflow of 88.5 billion yen during the month, an official at the association said.

Daiwa SB Investment's short-term Australian Dollar fund and Daiwa Asset Management's High-grade Oceania Open fund also suffered big outflows, the official said.

Inui said the effect of outflows boosted inflows in domestic bond funds as retail investors parked their proceeds from equity funds into money reserve funds, which is categorised as a bond fund. Bond funds saw a net inflow of 287.9 billion yen in December, up 70 percent from the previous month.

Following is a breakdown of the data:

Net money flows (in yen):

Dec Nov

Overall: +154.4 bln +99.3 bln

Stocks: -133.5 bln -69.6 bln

Bonds: +287.9 bln +168.9 bln

Value of publicly placed toushin (in yen):

Dec Nov mth/mth

Overall: 64.06 trln 60.90 trln +5.2%

Stocks: 52.91 trln 50.04 trln +5.8%

Bonds: 11.15 trln 10.86 trln +2.6%

Value of privately placed toushin (in yen):

Dec Nov mth/mth

Overall: 31.84 trln 30.59 trln +4.1%

Stocks: 31.32 trln 30.05 trln +4.2%

Bonds: 520.8 bln 541.9 bln -3.9%

Dec Nov mth/mth

Value of ETFs: 4.21 trln 3.83 trln +10.1%

($1 = 88.4950 Japanese yen) (Reporting by Chikafumi Hodo; Editing by Matt Driskill)

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