Institutional investors in Japan are moving aggressively into alternative investments

With 10-year Japanese government bond yields at 0%, and equities generating dividend yields at a mere 1.8%, the country’s institutional investors are shedding their aversion for risk and entering alternative investments like never before.

Preqin study indicates bullish trend in favour of alt

Major investors have announced their intentions to rebalance portfolios with a bias in favor of alternative investments.

Preqin found in a recent study of Japanese institutional investors that 42% would increase investments in private debt, 39% would likely increase allocations to infrastructure, and 37% indicated they would boost allocations to private equity.

Two-thirds of Japanese institutional investors have invested in at least one alternative asset class, as persistent low yields have pushed them to look beyond traditional investment routes, says Preqin.

Further, over the next year, almost all institutions with alternative investments were planning to add new investments, the report said.

What are their top alt picks for Japanese investors?

The nation’s investors have piled into private debt, private equity, infrastructure, foreign equities, and fixed income.

By all appearances, this trend is likely to continue.

The rapid aging of the population also pressures Japanese institutions to increase returns high enough to service their mounting liabilities.