Japanese Domestic Index Funds?!

[skelton]

Hello all,

Let me start by saying I am a complete newb. Thanks to a lot of good information on this site, I have set up my iDeCo and NISA and am getting to grips with the basics.

I am mid 30's, so aiming for long term, low risk investment.

I am thinking a small percent of bond index funds and a the remainder in eMAXIS Slims like S&P500 and オール・カントリー.

With that being said, in Millionaire Teacher it recommends that an investor should always hold an index in their home country. For Japan this could be a TOPIX index?

...but I have seen very little talk of people getting Japan index funds. Is there any upside or reason to get involved with the seemingly worse performing Japanese domestic index funds?!

[RetireJapan]

All-country includes Japan, so you only need to add a separate Japan fund if you want to overweight Japan (ie you expect Japan to outperform other countries).

[beanhead]

If you have:
- salary in yen
- bank savings in yen
- emergency cash fund in yen
- Japanese pension (kokumin nenkin or kosei nenkin)
it could be argued that this is decent enough exposure to the Japanese economy. The All-Country allocation to Japan should therefore be plenty.
Some of the Japanese financial bloggers actually advise buying the eMaxis Slim global fund without Japan for this reason.

I am thinking about Japanese bonds in the future. At the moment I have a small amount of the developed-country eMaxis Slim bond fund, but at 55 or 60 or so I will think again about fixed income/bonds and domestic vs overseas.

[Established]

I am thinking about Japanese bonds in the future. At the moment I have a small amount of the developed-country eMaxis Slim bond fund, but at 55 or 60 or so I will think again about fixed income/bonds and domestic vs overseas.

Why Japanese bonds specifically? The rates are pretty horrible.

I also have a developed-country eMaxis Slim bond fund allocation as well (4%), and plan to pair it with a hedged international bond fund when I approach middle-age.

[skelton]

Thank you RetireJapan. I see.

I do have those things in yen, beanhead. Thanks for the information & perspective.


I am also thinking of ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス for my bond allocation. I would also be interested in the possible reasons for getting Japanese bond funds, I had a look and they seemed pretty bad.

[fools_gold]

It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

[RetireJapan]

It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

Another advantage of Japanese bonds is no currency risk (or no hedging expense).

[Established]

It's easy to focus on yields and overlook the reason why you buy bonds in the first place. I'm probably in the minority here, but I think that the bonds part of your portfolio is exactly where you shouldn't be taking risks. If you're buying bonds for stability, then I think at least some of that allocation should be in Japanese bonds. My bonds are about 50/50.

Yields on Japanese bonds are far from attractive, but that's becoming a worldwide thing. Actually, the EmaxisSlim fund recommended in this thread is about 40% Euro bonds. Yields there are as bad as in Japan.

Another advantage of Japanese bonds is no currency risk (or no hedging expense).

If that was your concern, wouldn`t time deposits be a better option?

https://bankdeposit-sfp.com/interest/

I am not sure why J-bonds would be a better choice. I would still prefer Treasuries, Unhedged fund [Currency risk], Hedged-fund or time deposits [No -currency risk]. But I fear I am missing something.

[zeroshiki]

Japanese bond yields are at like 0.05% right now. You'd actually do much better getting Rakuten Bank and linking it to Rakuten Securities and getting the 0.1% interest rates they're giving out. Your money is way more liquid with a better interest rate.