Halister News

(Bloomberg) -- Japanese institutional investors are broadening their fixed-income exchange-traded fund exposure to include investment-grade corporate bonds and U.S. high yields, according to BlackRock Inc.

• Japanese investors moved initially into Treasuries and U.S. agency ETFs before expanding into investment-grade corporate bonds and U.S. high yields this year, says Jason Miller, head of ETFs at BlackRock Japan Co. Ltd.
  • Funds also showed interest in European corporate and emerging-market debt after the U.S. election and at the start of the year
• Large institutions in Japan are typically more interested in investment-grade bonds but their focus is broadening: Miller
• "Many mandates don’t allow high yield component, but what we see now is some have broader mandates, or have been able to start participating in the U.S. high yield market": Miller
• Number of Japanese institutions perusing BlackRock’s fixed-income ETFs rose to 92 as of August 2017 from 59 in December 2014, according to BlackRock
• BlackRock expects more global investors to turn to fixed-income ETFs as the Federal Reserve normalizes its monetary policy, said Stephen Laipply, head of fixed-income strategy for the firm’s U.S. ETF business
  • "In many respects, rising rates could be appealing to some investors who have been actually waiting": Laipply

To contact the reporters on this story: Chikafumi Hodo in Tokyo at chodo@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui