Low interest rates and a reluctance to take risk had a significant impact upon Asian investor behaviour throughout 2012. Funds following equity-based strategies have not been popular as investors have sought income as an alternative to falling bank deposit rates.
In the past, Asian investors have traded funds actively and allocated geographically or by investment theme, causing a constant rotation among funds that many providers have viewed as a sign of a lack of maturity in this market. Since the global financial crisis and particularly in the past year, retail investors have focused on strategies that deliver income to the benefit of the Asian fund industry.
In Japan it has been the case for many years that investors have focused ostensibly on yield and income. Since the bursting of the Japanese equity bubble at the end of the 1980s, an ageing population has been more interested in current income rather than future capital growth. Even when Japanese fund investors have increased their risk appetite; any allocation to equities has been relatively small, cyclical and fleeting.