Japan-Based Investors Embrace Alternative Assets

SINGAPORE,June 26,2019 -- Preqin's new report on alternative asset investors in Japan finds that when the Bank of Japan adopted negative interest rates in 2016,it led many investors 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. Investors are primarily focused on local investments in private capital,with the largest proportions targeting the Far East. But increasingly,Japan-based investors are also seeking to allocate to other regions in search of diversification. 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.

See the full report here:

https://docs.preqin.com/reports/Preqin-Investor-Outlook-Alternatives-in-Japan-June-2019.pdf

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' ability to offer diversification and long-term yield have brought them to the forefront of investors' minds. While they are looking for opportunities to allocate to the rest of Asia,North America and Europe,investors remain primarily focused on domestic opportunities. We might see this change if the low-interest and slow-growth environment remains in place."

Key Facts:

There are currently 303 Japan-based investors active in alternative assets,second only to China (450) within Asia-Pacific.

Of these,66% invest in at least one alternative asset class. The largest proportion (58%) allocates to private equity,while the lowest proportion (34%) invests in hedge funds.

The Far East remains the most sought-after investment destinationfor private capital investors.

However,significant proportions of investors also look to allocate to funds in North America and the rest of Asia-Pacific.

Ninety-six percent of private equity investors intend to make fresh investments in the coming year,compared to just 54% of hedge fund and private debt investors,and 41% of natural resources investors.

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