Bank of America says Japanese retail investors are sending more money abroad through investment trusts, a gradual headwind for the yen. The bank does not see it as a sign of broader yen depreciation, and record foreign inflows into Japanese portfolio investment offset part of the pressure.
Japanese retail investors are buying foreign assets through investment trusts at an annualized pace of nearly ¥16 trillion, Bank of America reports. Before the new NISA program launched in 2024, that pace stood at ¥6-7 trillion.
The bank still calls the flow modest. In its November 4, 2026 research note, it says outward portfolio investment through investment trusts remains modest relative to Japan's economy size when compared with Korea and Canada.
Meanwhile, money is also moving the other way. Japan's portfolio investment is recording its largest net inflows on record, driven by foreign investors' purchases of Japanese yen bonds.
Bank of America adds that an improving balance of payments and higher yen funding costs as the Bank of Japan raises rates could lead to lower foreign exchange hedge ratios. Inflows into Japanese equity funds have accelerated this year, though those funds have not yet taken market share from global equity funds.
Its conclusion: the rise in retail foreign investment creates a gradual headwind for the yen but does not imply a broader yen depreciation trend.
Source: Investing.com
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