Record $11.8B Outflows Hit Japanese Equity Funds

In the past week, Japanese equity funds saw record-breaking net outflows of $11.8 billion, as investors reacted to rising government bond yields in Japan. This has pushed the 4-week moving average of outflows to $4.0 billion, which is the highest ever recorded.

The sharp rise in long-term Japanese government bond yields has made investors nervous. As a result, many are moving their money out of equity funds and looking for safer options.

The trend was not limited to Japan. US stock funds also experienced large outflows, with investors pulling out $5.1 billion last week.

Across the world, global equity funds reported net outflows of $9.5 billion, marking the largest weekly withdrawal of the year so far.

Experts say that investors are likely booking profits after a strong recovery in global stock markets in recent months. Many are choosing to reduce risk and wait for more stable market conditions.

Japanese Equity Funds See Record $7.49 Billion Weekly Outflow as Investors Turn Cautious

Japanese equity funds saw massive withdrawals in the week ending May 28, with investors pulling out $7.49 billion — the biggest weekly outflow in almost 18 years, since July 2007. This came after a long rally, partly driven by hopes of easing U.S.-China trade tensions. Some investors likely booked profits, while others grew cautious about Japanese companies’ future earnings.

Experts also say Japan’s large insurance and pension firms may have rebalanced their investments — selling rising stocks to buy safer bonds. Another reason is the strong yen, which has gained 10% against the U.S. dollar this year. A stronger yen can hurt export profits. Over the past month, analysts cut earnings forecasts for Japanese companies by 1.8%. Most of the outflows came from domestic investors, who withdrew $7.55 billion, while foreign investors added a small $59 million. The biggest ETF redemptions were: Daiwa iFreeETF TOPIX ($2 billion), Nikko Listed Index Fund TOPIX ($1.92 billion), and Nomura NF TOPIX ETF ($1.61 billion).

Key Takeaways:

Japanese equity funds: $11.8 billion outflow (record high)

4-week average: $4.0 billion outflow (all-time high)

US equity funds: $5.1 billion outflow

Global equity funds: $9.5 billion outflow (largest in 2025 so far)

Main reason: Rising bond yields and profit booking

Why It Matters

These large outflows suggest that global investors are turning cautious. Rising bond yields, especially in Japan, are making fixed-income investments more attractive. This could lead to more volatility in stock markets in the coming weeks.