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Japan mutual fund value at 7-mth high but equity funds suffer outflows
December 13, 2012 / 8:32 AM / 5 years ago

Japan mutual fund value at 7-mth high but equity funds suffer outflows

TOKYO, Dec 13 (Reuters) - The asset value of Japanese mutual funds rose above 60 trillion yen ($724 billion) for the first time in seven months in November, but equity funds suffered a net outflow as reduced dividends prompted selling from retail investors.

The overall value of investment trust funds, a type of mutual fund sold to retail investors, rose for the sixth consecutive month to 60.9 trillion yen ($734.4 billion) last month due to a weaker yen and strength in global share prices, the Investment Trusts Association of Japan said.

The value of mutual funds rose 2.1 percent from the previous month and posted the biggest monthly increase in value since February.

Recent falls in the yen have helped boost Japanese share prices due to growing expectations of aggressive monetary easing by the Bank of Japan after a general election on Sunday.

Opinion polls show conservative former Prime Minister Shinzo Abe’s opposition Liberal Democratic Party and its smaller ally heading for victory. Abe wants the central bank to conduct monetary easing more aggressively.

Still, equity funds saw a net outflow of 69.6 billion yen in November - the first net outflow since March - after investors pulled out their money as several asset managers decided to lower dividends for some mutual funds.

That resulted in limiting the overall net inflow to 99.3 billion yen in November, down from 289.7 billion yen a month earlier, the association said.

“We’ve seen big outflows from several funds as they decided to lower dividends,” Fumio Inui, vice president of the association, told a news conference.

The association and Japanese regulators have tightened rules for selling sophisticated mutual funds, including funds that offer monthly dividends, requiring investors to be given a full explanation of the risks.

“I think outflows will only be a temporary trend. But this is a good sign that asset managers are lowering dividends as many holders of funds are elderly people,” Inui said.

Monthly dividend-oriented funds drew strong demand over past years, although many of these funds could draw down the principal to generate dividends, which confused some retail investors.

Following is a breakdown of the data:

Net money flows (in yen):

Nov Oct

Overall: +99.3 bln +289.7 bln

Stocks: -69.6 bln +45.8 bln

Bonds: +168.9 bln +243.9 bln

Value of publicly placed toushin (in yen):

Nov Oct mth/mth

Overall: 60.90 trln 59.62 trln +2.1%

Stocks: 50.04 trln 48.93 trln +2.3%

Bonds: 10.86 trln 10.69 trln +1.6%

Value of privately placed toushin (in yen):

Nov Oct mth/mth

Overall: 30.59 trln 29.58 trln +3.4%

Stocks: 30.05 trln 29.03 trln +3.5%

Bonds: 541.9 bln 548.0 bln -1.1%

Nov Oct mth/mth

Value of ETFs: 3.83 trln 3.65 trln +5.0%

Assets in foreign currencies (in yen):

Nov Oct mth/mth

Overall: 23.05 trln 22.59 trln +2.0%

Stock: 3.64 trln 3.56 trln +2.2%

Bond: 12.76 trln 12.61 trln +1.2% ($1 = 82.9300 Japanese yen) (Reporting by Chikafumi Hodo; Editing by Chris Gallagher)

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