Global Market: Japanese fund managers bet big on yen bonds as BOJ policy shift lifts yields

Japanese asset managers are racing to launch bond funds as rising interest rates revive investor appetite for yen-denominated debt, creating attractive yields that have been largely absent for decades, Reuters reported.

According to Reuters, firms including the asset management units of Mizuho Financial Group and Nomura Holdings are expanding their bond offerings to capture growing demand from both domestic and overseas investors.

Mizuho unit wins first foreign mandate

Reuters reported that Asset Management One (AMO) has secured its first mandate to manage yen bond investments for a Western institutional investor, citing two people familiar with the matter.


The mandate has not been publicly announced, and the sources spoke on condition of anonymity. AMO declined to comment.

The firm, which is partly owned by Dai-ichi Life Holdings, launched an actively managed yen bond fund for foreign investors in February—its first such product in roughly 30 years.

BOJ policy shift fuels demand

Interest in Japanese bonds has increased since the Bank of Japan began normalizing monetary policy in 2024, allowing bond yields to move higher.

Reuters quoted an AMO executive as saying the firm focused on areas where Japanese managers could offer unique expertise, particularly in yen-denominated fixed income.

Over the past two years, AMO has also reorganized its global sales operations to strengthen its bond business and reduce its previous emphasis on equities.

Nomura expands fixed-income push

Nomura Asset Management is also preparing an actively managed fund that will invest in both Japanese government bonds (JGBs) and corporate bonds, Reuters reported.

The company expects to secure overseas institutional mandates and has hired Richard Hastings, formerly of Goldman Sachs Asset Management, to help expand fixed-income sales and product offerings.

Nomura executives see yen bonds as a major growth opportunity as foreign investors potentially shift from underweight positions to neutral or overweight allocations.

Global investors watch entry timing

International asset managers are also reassessing Japan. Reuters reported that Amundi moved to a neutral-to-slightly-overweight stance on Japanese bonds in February for the first time in decades. However, concerns about inflation, Middle East tensions, Japan’s fiscal outlook and additional BOJ rate hikes later prompted a move back to a slightly underweight position. Amundi Japan executives said the firm is waiting for a more attractive entry point as yields continue trending upward.

Corporate bonds gain attention

Investor interest is increasingly focused on corporate bonds held to maturity, Reuters reported.

Sumitomo Mitsui DS Asset Management said clients are asking what returns can be earned by holding bonds for several years and what model portfolios can be constructed around that strategy.

According to the firm, A-rated corporate bonds typically offer spreads of roughly 50–60 basis points over JGBs, allowing investors to benefit from both government-bond yields and additional credit spreads. For overseas investors, yen weakness and currency hedging can further enhance returns.

Domestic managers see an edge Japanese asset managers believe their expertise in analyzing local corporate debt provides a competitive advantage, Reuters reported.

The opportunity is growing as more Japanese companies turn to bond markets to finance expansion rather than relying solely on bank lending.

Meanwhile, BlackRock, which has managed Japanese bond portfolios since 2006, launched the world’s first yen-denominated active corporate-bond ETF this year, targeting domestic financial institutions and retail investors.

BlackRock Japan said broader ETF adoption should improve market liquidity and make Japanese corporate bonds more accessible to foreign investors.

Japan’s bond market enters a new phase

After years of ultra-low yields, Japan’s bond market is undergoing a significant transformation. With interest rates rising, corporate issuance increasing and foreign investors returning, asset managers are positioning themselves for what many see as a long-term revival of yen-denominated fixed income.