In July, Japanese funds experienced a significant surge in inflows, reaching an all-time high of ¥1.92 trillion ($13.1 billion). This increase came as investors eagerly returned to Japanese stocks, capitalising on the lower prices before the market entered bear territory later in the month. Despite a slight decline in stock prices earlier in July, the appeal of Japanese equities remained strong, with Japan equity funds seeing a substantial jump in inflows to ¥190 billion in July, up from just ¥6.9 billion in June, according to Morningstar Direct.
The majority of these inflows were directed towards large-cap stocks, which, despite already high valuations, attracted ¥82.7 billion in July, up from ¥67.7 billion in June. Conversely, small and mid-cap stocks did not fare as well, experiencing outflows of ¥22.3 billion, slightly worse than the ¥21.7 billion outflow in June.
Global investment trends also showed robust activity, with world equity funds hitting a record ¥1.53 trillion in inflows in July. This was driven by increased investments in global markets, particularly in North America and Europe, which more than offset the reduced inflows into emerging markets, Asia, and Oceania.
In contrast, bond funds showed little change. Japan bond funds attracted ¥23.9 billion in July, a slight decrease from ¥28.1 billion in June, while world bond funds remained relatively steady at ¥45.6 billion, compared to ¥42.8 billion the previous month.
Real estate investment trusts, however, continued to struggle, marking the third consecutive quarter of outflows, which totalled ¥65 billion.
The strong inflows into Japanese funds and global equities reflect a renewed investor confidence, despite the market challenges faced in July.
