Japan-domiciled open-ended funds attracted 4.17 trillion yen (US$26.3 billion) of net inflows in the fourth quarter of 2025, a 59% increase from 2.62 trillion yen a year ago as investors began to diversify from only stocks into other asset classes, including gold funds, according to Morningstar Inc.
The expansion of the Nippon Individual Savings Account (NISA) could further influence individual investment behaviour, Morningstar says in a report on January 20.
NISA is a savings scheme designed to encourage individual investment with tax breaks.
Last month, the Japanese government announced plans to expand the scheme to include those below 18 years old to facilitate investments for education and future expenses.
NISA eligible funds drew 3.19 trillion yen of net inflows in the three months to December, 55.6% more than the 2.05 trillion yen in the same period of 2024.
“As NISA evolves into a lifelong investment platform for all generations, we are witnessing a structural shift in Japan toward disciplined, long-term wealth creation,” Daisuke Motori, director of manager research at Morningstar, says in the report.
Despite the fourth-quarter jump, net inflows into open-ended funds dropped 7.1% year-on-year to 14.23 trillion yen in 2025, with NISA eligible fund flows down 14.3% to 11.3 trillion yen. The report does not give an analysis of the decline.
Meanwhile, according to Morningstar, investors are increasingly favouring disciplined, long-term investment strategies over short-term trading.
“These reforms may land at a pivotal moment – when investors are already thinking beyond performance chasing and toward portfolio construction aligned with time horizons and risk tolerance,” the report says.
