JAPAN - Japan has made a reappearance on pension funds' radars, with asset managers reporting higher inflows to equity funds investing in the country.
Mark Roxburgh, head of marketing and client services, Nomura Asset Management, told Global Pensions: "Japan was the unloved child of 2007, but I think we've hit a turning point and it is time for it to catch up."
Emerging Portfolio Fund Research (EPFR), an organisation which tracks fund flows geographically, stated new money had been attracted to the funds it follows in Japan last week for the first time in 2008, and only the second time in over 12 months.
Roxburgh said Nomura had a pipeline of mandates from pension funds in the UK, Luxembourg, Sweden and Japan itself. In preparation for these new contracts, it had appointed three new staff members to increase capacity.
Charles Beazley, president, Nikko Asset Management, said it had recently measured inflows of $2bn to its Japanese funds.
Beazley said: "Value investors have realised Japan is moving out of its uncomfortable bear market and although storm clouds have gathered over the global economy, it has fared better than many others."
He continued: "As Japan entered the gloom first, it may be the first to emerge through the other side."
Native investors in Japan, which remains the world's second largest economy, are relatively conservative, so the country has appeared more of a safe haven in volatile times.
Its geographical position has also helped it benefit from good exposure to growing emerging markets.
Roxburgh said the country could benefit from a slight inflation increase to bring hesitant consumers back to spending and kick-start the local economy, making national equities an interesting option.
He added some political governance issues affecting the economy had been resolved recently, which could tempt investors back.
EPFR agreed the government had begun to show signs it was getting a grip on the economy.
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