Opalesque Industry Update - The Bank of Japan adopted negative interest rates in 2016, leading many investors in the country to seek more
diversification and higher yields by investing in alternative assets. In 2019, two-thirds of Japan-based investors now
allocate to at least one alternative asset class, ranging from almost six out of 10 that invest in private equity to a third
that invest in hedge funds. Investors are primarily focused on local investments in private capital, with the largest
proportions targeting the Far East; by contrast, hedge fund investors generally take a global approach. But increasingly,
Japan-based investors are also seeking to allocate to North America and the rest of Asia-Pacific in search of
diversification. In most asset classes, investors are also more favourable toward strategies higher up the risk/return
curve, indicating that they are looking to alternatives to provide yield, not simply protect capital. Jie Sin Chia, Head of Asia Products: "A persistent low-interest environment set by the central bank, as well as stagnant growth in recent years, have put enormous pressure on Japan-based investors as they look to meet their returns targets. Alternative assets have long been a part of the investment landscape in Japan, but the industry's ability to offer diversification and long-term yield have brought them to the forefront of investors' minds. While they are clearly looking for opportunities to allocate to the rest of Asia, North America and Europe, in most asset classes investors remain primarily focused on domestic opportunities. We are likely to see this shift if the low-interest and slow-growth environment remains in place." Key Japan Investor Outlook Facts:
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Industry Updates
Preqin: Japanese investors embrace alternatives
Friday, June 28, 2019
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