Japanese Investors Test Waters With Fixed-Income Products

Many Japanese investors are returning to the security of government bonds, despite acquiring a taste for sophisticated fixed-income products like credit derivatives and asset- and mortgage-backed securities, according to a study by Greenwich Associates. The study noted that Japanese investors have reported an increasing interest in these relatively exotic products and that trading volumes in Japanese government securities are soaring. ‘Japanese investors are dipping their toes in the water with new products, but they still prefer the safety of government products – especially considering the unprecedented volatility in the market of late,’ says Greenwich Associates consultant Tim Sangston. Greenwich’s research revealed an increase in cash bond assets under management and similar jumps in trading volumes of overall cash bonds and Japanese government securities. The report found that more Japanese investors are using credit derivatives, ABS and MBS, although trading volumes in these products remain small.

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