Even Negative-Rate Veterans Are Struggling With Bond Choices
- Few markets offer a significant yield step-up for Japan funds
- Japanese investors may be wary of European bonds: Nissay Asset
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Japanese bond investors are better accustomed than most at trying to eke out returns in a negative-yield environment. But they’re struggling with a dwindling pool of attractive options, which doesn’t bode well for international peers who might be looking to use a similar toolkit.
While money managers globally have snapped up a recent flood of supply to fund trillions of dollars worth of stimulus packages, the shrinking returns on fixed-income instruments are making it increasingly hard to earn decent returns. Funds in Japan have long sought better returns from higher-yielding debt abroad. But even after a recent tumble in currency hedging costs, the choices out there aren’t as wide-ranging as one might think.