Japan's Bond Yields Attract Investment Trusts Amid BOJ Normalization

Japanese government bonds (JGBs) have seen a surge in yields, making them attractive to investors. After years of low returns, JGBs now offer higher yields than US Treasuries and German bunds. Asset managers are taking notice and launching investment trusts focused on long-term JGBs.

Mitsubishi UFJ Asset Management is joining Daiwa Asset Management and Amova Asset Management in offering investment trusts for super-long bonds. The 30-year JGB yield has risen to near 4%, higher than Germany's 30-year bond yield of around 3.6% and close to the 5.2% of 30-year US Treasuries.

The Bank of Japan (BOJ) is expected to reduce its JGB holdings by ¥48 trillion this fiscal year, which could lead to increased demand from retail investors. The government aims to increase JGB issuance by ¥15 trillion this year and continue tapping debt markets for stimulus plans and tax cuts.