Most Japanese HNWIs actively investing, survey finds

20 August 2014   Category: News, Asia, Global, Japan   By Derek Au

More than 70% of Japanese high-net-worth individuals (HNWIs) actively invest their assets, a survey showed, with foreign currency deposits one of the most popular instruments.

According to a report by National Australia Bank (NAB), which covered 508 Japanese HNWIs with an annual income of at least 20 million yen (US$200,000), 72% are actively investing and growing their wealth, while 65% of them have more than ten years of investing experience.

As for their preference for asset classes, 76.6% have exposure to domestic equity; 40.1% to foreign currency deposits; 39% to domestic equity mutual funds; 25.3% to domestic bonds; and 24.5% to local real estate.

The survey found Japanese HNWIs with global portfolios have a more positive outlook on their returns, compared to those only investing in domestic assets. One-fifth (20%) of investors with global portfolios claimed, “they are very successful” in growing their assets, compared to 15% of investors that only had a domestic allocation, according to NAB.

The survey highlighted that overseas real estate did not rank particularly highly as an asset class, but 10% of investors with global portfolios said they would be interested in exposure to this space.

Commenting on the survey’s findings, Kohei Tsushima, general manager at NAB, Tokyo branch, said: “Whilst it is not surprising that high-net-worth Japanese investors with global portfolios are happier with their investment returns, it is surprising that relatively few of them choose to invest in overseas real estate assets, particularly compared to Chinese HNWIs who have been very active investing in real estate in every major market in the world.”

Mr. Tsushima added that overseas real estate presents Japanese investors with an opportunity to leverage differences between the property cycles in Japan and overseas markets, such as Australia, to achieve higher yields.

The survey also found that about 25% of Japanese HNWIs with domestic investments are keen to diversify their portfolios to include overseas assets. “Japanese investors should think twice about having a non-diversified portfolio as this can lead to increased risk and less opportunity,” Mr. Tsushima said.