The Truth About U.S. Stock Investments from Shigenobu Kawada: "American Stock Course Trained by the Media" [Vol.35] Delivered February 21, 2022
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The Truth About U.S. Stock Investments
［Vol.35］ February 21, 2022
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Kawada Shigenobu's “U.S. Stock Investment Course Trained by the Media”
***Table of Contents***
Market Review
This Week's Featured Articles
Kawada's Stocks to Watch
Investment Tips
A Walk
A Pause: “FA Perspective”
What the Ultra-Wealthy Practice: “Private Investment Strategy”
Activity Information
Q&A Corner
Online Salon “Asset Formation School Where Dreams Come True”
An online salon where everyone studies and motivates each other to succeed in asset formation. We offer member-only seminars that convey content not fully captured by the popular newsletter “U.S. Stock Investment Course Trained by the Media” and allow you to experience the魅力 of U.S. stock investing.
2000 Million Yen Achievement Pace Maker
Source: Financial Services Agency, created by ExeTrust Co., Ltd. based on asset management simulation
※The numbers above are simulations and do not guarantee future performance. Fees and taxes are not considered.
How to read: assumed yield and target year
3–4% for 30+ years: wrap funds or balanced funds fit this
5–7% still takes about 25 years: for non-U.S. stock funds maybe like this
8–10% around 20 years: a modest view of the S&P 500 rise would be like this
S&P 500 performance history (dividends reinvested, 1970-2021)
Achieve 20,000,000 yen early with proper risk-taking
Kawada's message is extremely simple. To reach 20,000,000 yen, have as much of your surplus funds work as efficiently as possible. For that, it is important for the participants to correctly understand the meaning of risk and reward. Before reading the weekly newsletter, glance at this table and confirm your correct investment posture.
Now, start the countdown to 20,000,000 yen right now!
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1. Market Review (Feb 14–Feb 18)
＜Major Indices＞
・Dow Jones -1.9%
・S&P 500 -1.6%
・Nasdaq Composite -1.8%
＝Faster Version＝
Although there was a temporary rebound due to a sense of security regarding Ukraine, geopolitical risks rose again and stocks were sold off. Long-term yields declined following the January FOMC minutes, but the impact on the stock market was limited.
＝A Little More Detail＝
In the first half of the week, geopolitical risks subsided somewhat and, despite January’s producer price index exceeding market expectations, inflation concerns remained contained and interest rates stabilized, leading to a calm trend centered on growth stocks such as semiconductors.
The release of January’s FOMC minutes eased concerns about the pace of rate hikes, which supported a downward pressure on long-term interest rates.
However, in the latter half of the week, worries about the movements of the Russian military and potential repercussions from Ukraine, following the Beijing Winter Olympics, led to renewed selling pressure.
Investors’ sentiment deteriorated as semiconductor stocks with strong earnings were sold, and with February 21 being a market holiday, making it hard to take active positions, resulting in a soft market for growth stocks toward the end of the week.
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2. This Week’s Picked Articles
A section that selects and ranks information useful for asset formation from what I have gathered, and provides my personal commentary.
【1】Nikkei NewspaperInstitutions dumping US tech; Dalio adds to China IT stocks; Buffett increases oil stocks by 30% 2/18
and
【2】CNBC Feb 15 “What stocks are Warren Buffett, David Tepper, and other big investors backing?”
Institutions’ 13F filings
U.S. large institutions are required to disclose their holdings quarterly, and the reports are called “Form 13F.”
Including asset managers, hedge funds, and family offices, holdings as of mid-February were disclosed for the end of December 2021 (within 45 days). By comparing with holdings as of September 2021, one can infer investment behavior.
Overall, many investors reduced holdings in high-tech stocks, with notable selling of big tech like Meta Platforms. The following are changes in holdings of major institutions.
Berkshire Hathaway
From October to December 2021, raised holdings in Chevron (CVX) by more than 30%, bringing the total stake to over $5 billion. The initial purchase was at end-2020, and Chevron’s stock rose 39% in 2021 and another 14% this year.
Mastercard (MA) and Visa (V) were reduced, while Novo Holdings (NU), a Brazilian online bank, was newly purchased.
Top five holdings at end of 2021 were Apple (AAPL) worth $157.5 billion, Bank of America (BAC) $44.9 billion, Amex (AXP) $24.8 billion, Coca-Cola (KO) $23.7 billion, Kraft Heinz (KHC) $11.7 billion.
Notable new investment was in the game giant Activision Blizzard (ATVI), with about $1 billion (slightly under ¥1150 billion) in market value held, while the stock surged this January after Microsoft’s announced acquisition. Buffett and Microsoft founder Bill Gates have close ties, which has led to some speculation about connections on social media.
Chevron (CVX) 5-year chart
Apulsa Management
Apalus Management, led by David Tepper, owner of the Carolina Panthers in the U.S. NFL, sold all Twitter (TWTR) shares and newly acquired General Motors (GM), a value stock with low P/E; GM stock was bought.
In addition, holdings in department stores such as Kohl’s (KSS) increased by 10%, while sports retailer DKS, apparel retailer Gap (GPS), and department store Nordstrom (JWN) were newly purchased as brick-and-mortar retailers. Macy’s (M) holdings increased by 44% to become the third largest holding. Macy’s book value is $260 million, but market value has declined slightly to about $250 million.
Apalus reduced holdings in Alphabet (GOOGL) and Meta Platforms (FB) by 13% and 8% respectively in Oct–Dec, but remained among the top two holdings. GM’s stock bought 2.2 million shares, bringing its market value to $110 million.
Nordstrom (JWN) 5-year chart
Third Point
In 2020, Third Point reduced its stake in Disney (DIS) by 52% from Oct–Dec. Third Point took newly positions in Rivian Automotive (RIVN) with over $400 million and Accenture (ACN) with $520 million. Amazon (AMZN) was increased by 27%, while two-thirds of Upstart Holdings (UPST) were sold.
Since 2020 Q2, Third Point has not held Japanese stocks since selling Sony Group (6758).
Accenture (ACN) 5-year chart
Biking Capital and Soros Fund Management also took positions in Rivian. Gave Protkin’s Melvin Capital, which suffered from GameStop short squeezes last year, increased investments in reopened economy stocks.
Live Nation Entertainment (LYV) increased by 64%, and Hilton (HLT) and Expedia (EXPE) also increased by 40% and 36% respectively. Uber (UBER) and Advance Auto Parts (AAP) also disclosed new holdings.
Colfax bet on Visa and Mastercard, which Berkshire Hathaway reduced, and bought EQRx at a sharp decline. Cloud company Five9 (FIVN) holdings were reduced by 65%, and Amazon was reduced by 30%.
Tiger Global Management
Chase Coleman’s Tiger Global Management increased its stake in Peloton (PTON) by 42% in Oct–Dec as its stock fell sharply. Berkshire Hathaway’s support for Novo Holdings, a Brazilian fintech, led to a $2.5 billion buy. Snowflake (SNOW) and Carvana (CVNA) increased by 16% and 18% respectively.
Snowflake (SNOW)
Among the most bearish investors on Tesla (TSLA), David Einhorn’s Greenlight Capital bought Tesla puts.
【Kawata’s Comment】
Well-known investment firms and funds run by famous figures like Warren Buffett and Ray Dalio attract media attention. Their holdings can be verified in this “Form 13F” for quarter-end disclosure.
This time, what caught market attention was that they had been selling growth stocks in advance.
However, in general these funds aim to “not lose” rather than to “beat the market” and many seek stable investment returns across volatile markets.
In fact, the long-term performance of many hedge funds lags behind the S&P 500 index. Still, their evaluation is about risk-adjusted performance rather than absolute returns.
Buffett: Over the past 20 years, above-average, but over 5 years, an average investor
By the way, Berkshire Hathaway’s traditional shareholders’ letter, published on February 26, shows that its returns over the past year were nearly 29%, almost double the S&P 500. Yet over the past five years it trailed the S&P 500, over ten years it was roughly in line, and over twenty years it slightly outperformed the S&P 500.
Staying in the market is the mark of a “genius”
In other words, even Warren Buffett, revered as a master, is ordinary by the standards of the past 20 years. Yet his true greatness lies in staying in the market for so long and continuing to generate returns. I believe this eternal presence in the market and confidence in U.S. stocks is what elevates him to a near-mythic status.
Berkshire Hathaway / S&P 500 Index (long-term chart since 1981)
If the chart trends upward, Berkshire’s performance is relatively favorable against the S&P 500
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3. Kawata’s Notable Stocks
From Kawata’s holdings and other U.S. stock information, I’ll introduce stocks that caught my attention.
This week, I’ve chosen from Barron’s Roundtable, a feature in the U.S. investment weekly where ten financial market experts discuss the economy and society and then disclose recommended stocks. It’s a highly watched piece among U.S. investors.
This week’s stock
Shopify Shopify Inc.
Overview
A Canadian software company providing a platform essential for launching, operating, and growing retail businesses. It serves individuals, small businesses, and large enterprises, with customers in 175 countries.
What makes it attractive
Shopify is primarily an online sales platform, but it is expanding its services beyond online solutions. As described in its materials, it is moving toward offering a unified platform that combines various online sales channels and traditional brick-and-mortar stores, including inventory management and marketing strategy.
（Figure 1: Previously, various types of stores existed...）
（Figure 2: Shopify consolidates everything and digitalizes related operations）
Currently, Shopify’s share of the U.S. platform market is second to Amazon.com (41.0%), at 10.3%. Other companies rely mainly on their own sales networks, so they have established themselves as platform companies for third parties.
Also, online sales are increasingly conducted not only on company websites but via social media, and Shopify’s platform can serve as a platform for selling through social media influencers, which could be a major growth driver going forward.
（Figure 3: Share of U.S. online sales platforms in 2021）
Sales via Shopify’s platform (GMV) contribute to growth in other paid services. Among them, Shopify Payments is considered promising. By adding its own online payments, it aims to improve profitability. If it reaches a scale comparable to PayPal Holdings in this field, stock valuation could rise further.
（Figure 4: GMV and growth through Shopify）
（Figure 5: Shopify’s revenue trend）
（Figures 1–5 are from company materials）
Risks
As a new entrant in the booming online retail industry that provides a platform, the stock price had priced in significant future growth. Recent earnings also surpassed market expectations, but the overall headwind for growth stocks caused it to decline more than 50% from its high. In the midterm, there is growth in platforms for online sales, but if pre-emptive investments to expand service areas or offerings temporarily reduce profitability, investor reaction becomes a risk.
Shop’s basic data (Source: company data, Yahoo! Finance)
As of February 18
Stock price $656.88
Market cap $82.9 billion
Total revenue $4.61 billion
Trailing P/E 28.68x
Trailing yield -----
Headquarters: Ottawa, Canada
Public since: May 2015
Five-year stock price chart
Chart provided by TradingView.com
（This column aims to provide general information only and does not solicit the purchase or sale of any specific securities）
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4. Investment Tips
This column not only covers “investment methods” and “stock introductions” but also writes about “indices or statements that caught my eye” and “social and political developments.”
“Barron’s Digest”
Four lessons from the surge and plunge in Arc funds2/6 issue
ARK Investment Management’s flagship fund, ARK Innovation ETF , surged 157% in 2020 but fell 25% in 2021. This year, it has fallen further since the start, down more than 50% from its peak.
The fund aims to invest in “disruptive innovations that could dramatically change the way people live and work.”
Japanese investors can access ARK advice through funds managed by Nikko Asset Management. There are several thematics, and these funds, like ETFs, have also fallen significantly.
Many investors in ARK’s ETFs or mutual funds ended up buying at the highs or taking profits only on a small portion of a large rally.
From this kind of volatile thematic investing, I have summarized lessons based on Barron’s Digest.
1) Curbing chasing highs and short-term trading
If you weight the returns of ARK Innovation ETF for the 12 months through December 2021, it shows about a 12% loss. However, the fund’s drawdown during the same period was 4.3%, meaning investors bore roughly three times the fund’s decline. Over three years through December 2021, investors’ weighted returns were about 10% annualized, while the fund rose about 35% annually over that period, so investors’ returns were less than a third of the fund’s growth.
In other words, the average investor ended up with “profits small and losses large” due to trading. Mutual funds are fundamentally long-term investments. Yet many investors approach them with short-term trading tactics, leading to this kind of performance.
2) Owning multiple ARK funds does not provide diversification
ARK funds overlap in holdings. For example, ARKK and ARKW share about two-thirds of their holdings.
ARKX and ARKQ share about half the holdings.
Owning these funds together does not provide the diversification investors expect.
3) Invest an appropriate amount
Funds like ARK, which concentrate in fast-evolving industries, are not for everyone. You need to trust the managers who pick the winners and have the patience and capital to endure tough times.
4) If your portfolio is 100 million yen, ARK should be about 2 million yen
The key is to keep the investment as a complement to core holdings.
If your portfolio is a core-satellite approach with satellites making up 20% of assets, that’s 20 million for a 100 million portfolio. If you hold 10 individual stocks within that satellite portion, one stock’s weight would be about 2 million yen.
Not following this principle leads to poor risk control and sacrifices long-term performance.
If you can avoid the lure of aggressive marketing and maintain risk control, you can advance your asset-building mindset.
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5. A Walk Corner
◇◇Recent stores visited, movies, museums, book sections◇◇
～Kumakura Tsuneyoshi’s Volume～
Contributions by Kumakura Tsuneyoshi, a former securities man and voracious reader.
Payment Infrastructure Introduction [2025 Edition] / Junichi Shukawa
“Confirming customers’ money has been deposited is the job of sales!”… Not a line from the notorious manga Naniwa Financial Way. In 1980s Tokyo, a major securities firm was introduced with government bonds and international business as its two pillars, and while working in its international sales department, I was repeatedly pressured by my superior. From a broker’s perspective, it’s simply transmitting buy orders for client shares to the domestic stock market, executing trades, and collecting payment four days later (back then settlement was after three business days).
However, many landmines lay beneath.
For clients, there are many options to obtain yen for settlement: use cash on hand, convert foreign currency to yen, borrow yen, or sell yen-denominated securities, etc. Investors and brokers closely monitor which financial institutions in financial centers like Tokyo, London, New York, Singapore, and Hong Kong will accept the funds and issue proper payment instructions so yen arrives at the broker by the settlement date.
Naturally, behind such transactions, money and securities move from the seller’s account to the buyer’s account within the settlement system. The network of financial institutions, markets, and settlement systems that underpins these flows is a massive infrastructure comparable to transportation, communications, and energy, and is not just a luxury but a common asset of modern life.
Readers subscribed to this newsletter are likely investing in U.S. stocks through Japanese or U.S. securities firms. Would you be interested in how your invested money flows through various entities into U.S. markets? This book covers the global settlement phenomena and explains them in accessible terms. A single read may yield investment insights.
“Hoshi to Kaikyo” / Shinzo Ishihara
Even the self-styled elder statesman Ishihara Shintaro has passed away. My condolences.
Even after death, his words and close collaboration with his younger brother continue to be viewed as a shining path in postwar society.
I have loved his novels; I often think that if he had not immersed himself in politics, more outstanding works might have been written.
I believed Ishihara’s best work would be long novels, unlike Mishima Yukio who left a long Magazines-like work. Ishihara’s forte lay in shorter pieces.
People might mock, saying, “Play and politics were his main business, there was no time for novels,” but I think Ishihara was the ultimate confessional novelist.
Moreover, his life itself was extraordinarily privileged.
A life in Shonan with sailing and tennis, a fashionable entourage centered on his brother, late-night escapades—such aristocratic living was beyond the reach of most postwar individuals, so perhaps he did not need the capacity to write long works.
This book also draws on his real-life experience of offshore yacht racing from Los Angeles to Hawaii and Honolulu, where the protagonist, though already married, struggles with an affair.
At first glance, it resembles Melville’s Moby-Dick, but its underlying tone is romantic.
Perhaps this romantic nature was Ishihara Shintaro’s raison d’être.
【Kumakura Tsuneyoshi】
Joined Daiwa Securities in 1980. MBA from University of Chicago Booth School of Business through corporate-sponsored study. Worked in Singapore and Hong Kong, engaging in Asia business.
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New Series “Everything for Perfect: Asset Formation Using U.S. Stocks”
Introduction
We are publishing a series covering the basics necessary for asset formation. The overall structure is planned as follows:
What era are we living in? Part 1
Self-reliant Japanese people and essential asset formation for independence, Part 2
Is the stock market only in the U.S.? Part 3
Differences between Japanese and U.S. stock culture
Key characteristics of the U.S. market to know
Recommended investment strategies – Core-Satellite Investing –
Core investment strategy
Satellite investment strategy
What should you buy?
Sources of information and investments
5. The Features of the U.S. Market You Should Know
Continuing with contributions by Masashi Okura, familiar from our website’s “40 Years of U.S. Stock Investment” series.
Seasonality of U.S. Stocks ①
Fluctuation patterns of the U.S. stock market
From this week, over two installments, we will explain U.S. stock market seasonality. For clarity, note that the purpose of discussing seasonality is not to boost returns through clever trading, but to help investors stay in the market longer.
The most important thing to achieve large returns in stock investing is not to exit the market. To do this, you need to be prepared mentally so you don’t panic when the market moves. There are times when the market rises, and times when it falls; knowing this helps avoid panic. When the market falls in its downward phase, you can accept it as “as expected.”
“If it’s as expected, you should have sold earlier” — some may think this. But in practice, timing the top and bottom is not easy. Of course, depending on the conviction about the decline, one might time trades. Generally, however, staying in the market longer tends to yield better results than trying to time it precisely.
Now, Figure 1 is Kawata’s morning meeting slide showing the “S&P 500 Index Seasonal Chart” (seasonality of the S&P 500 index, from EquityClock.com). This graph uses past 20 years’ daily data to show how the S&P 500 tends to move over the year. It is fascinating in terms of monthly micro-movements, but here I will describe the big-picture trend.
If you ask experienced strategists and fund managers who have spent long in U.S. stock investing, they would likely describe the broad pattern shown by the big arrows in the chart. The U.S. stock market tends to be strong until around May, then softens until around autumn (September), possibly forms a significant pullback, and then rises toward the new year.
Figure 1: S&P500 Index Seasonal Chart
Sell in May.
Many have heard the investment adage “Sell in May and go away.” The British-origin phrase has a longer version: “Sell in May and go away; don’t come back until St Leger Day.” Investopedia explains this refers to aristocrats, merchants, and bankers leaving London in the hot summer to the countryside; St Leger Day is the late-September horse race—the final leg of the British Classics. Interpreting loosely, it means “sell in May, don’t return until early September.”
This adage exaggerates seasonality, but it’s clear that investors have long held some insights about seasonal patterns. I first learned of this adage in the late 1990s when I moved to London and engaged in overseas stock investing. Since then I have paid attention to seasonality. I don’t know exactly when this British adage began applying to the U.S. market, but if you are investing in U.S. stocks, it’s worth knowing about such seasonality. (To be continued)
【Masashi Okura】
From Ehime Prefecture. Graduated from Osaka University’s Faculty of Economics in 1984. In 2005, earned a PhD (Economics) from Saitama University. Worked at Citibank, N.Y., Cititrust Banking, and Société Générale Trust Bank (now SMBC Trust Bank). Has engaged in asset management for institutional investors such as pension funds and private banking for the wealthy. In 2017, established Eagle Capital Corporation in Kyoto’s Higashiyama. CFA charter holder. Member of the Investment Analysts Society of Japan.
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6. A Quick Break: “FA Perspective”
A column where Financial Advisors answer customers’ questions about asset management by Ryuichi Motohashi.
Q: When is the best time to start asset management?
A: With the concept of “Make time your ally”—start as soon as possible and keep it going for a long time...
The global stock market has recovered rapidly, changes in work style, and vague future anxiety have led many young people to seek asset management for the first time. They are thinking about FIRE (Financial Independence, Retire Early) and want to plan their future while staying at home.
However, when it comes to taking action, some hesitate with thoughts like “markets are expensive now…” or “which financial institution’s products should I invest in….”
In such cases, Time is money.
Since everyone has the same 24 hours a day, it’s important to move now rather than spending too much time pondering.
First, take the smallest possible first step. Recently, there are plans that allow micro-investing from about 100 yen.
And once you start well, then… Time is your friend.
Starting as early as possible and keeping it going is the sure path to solid asset formation. It requires a certain amount of time.
This concept that “time is valuable” is also shared in businesses that require quick decisions, strategic adjustments, and mid-to-long-term planning. Individual investors are, I think, money managers who have time on their side.
■In fact, “Time is ...” is a common principle in overseas wealth-building advice too...
The idea of Time is money! Time is your friend! is a mindset that a friend of mine, who is a Financial Advisor serving ultra-wealthy clients in the U.S., always tells his clients’ children and grandchildren.
Time is equally allotted to everyone... sometimes long, sometimes short, sometimes spent leisurely, and everyone has a unique perception and use of it. Yet the sense of time in asset management is a crucial “money and friendship.”
Starting as early as possible and continuing long-term may be a shortcut to success...
After graduating in 1998, he began his career at Yokohama Bank. He later became a private banker at a foreign financial institution. When the Lehman Shock rocked the world, he shifted to becoming a true financial advisor, independent of a single bank. Over about 20 years, he studied international PB/FA business models and devised ideas to improve client experience. He currently works as an independent financial advisor, focusing on asset management and private financial consulting for clients, independent of any specific financial institution.
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7. Private Investment Strategies Used by the Ultra-Wealthy
Hiroshi Ichikawa, who specializes in sales support for IFA, explains investment strategies used by the ultra-wealthy in a simple way for everyone.
Last time, I introduced the “Overview of Private Investment Strategies.” This time, I will discuss Private Equity, one of the four pillars of private investment products.
Private Equity refers to private, non-publicly traded stocks, broadly including all investments in private companies. Unlike publicly traded stocks on exchanges, these are shares issued in private placements for fundraising by private companies.
Private Equity investment areas
Investments in private equity are categorized by growth stages of the company,
Seed
Early
Middle
Late
In each stage, companies progress from start-up to going public. In private equity, early stages are high risk and high return, while approaching a public listing reduces risk and return.
Seed/Early stage is mainly funded by angel investors and some venture capital. At this stage, the business is still unprofitable and funding is sought for growth, so if successful, several hundredfold returns are possible, but there is also a risk of total loss if the business fails. Entrepreneurs who built companies often invest as angels to support the business. Investors here act more as advisors than typical investors, so opportunities are limited and riskier.
Middle stage is when some growth is expected and, unlike the early stage, large fundraising for explosive growth begins. Primary investors include venture capital, but institutional investors, i.e., professional investors, also participate. There are quite a few private investment strategies at this stage. The aim is to go public in 3–5 years with potential returns of 5–10x, though capital may be locked up for several years.
Late stage is when growth continues and the company approaches listing. Angels and venture capitalists who invested early are often successful and many exit here. This stage provides funding for going public and allows selling shares from existing shareholders. Private equity in this stage is very attractive, with potential 1–3 year timelines to listing. If opportunities arise, one would want to invest.
Private equity in the U.S. and Japan
This type of private equity is relatively uncommon in Japan. It is often associated with investment scams, which I aim to help eliminate.
But in the United States, it’s quite different. Private equity investments are common much like public stocks, and there are specialized brokers for private equity. While early-stage investments may be smaller, late-stage investments are highly active. It is often said Americans are aggressive about investing and own many stocks, and private equity is a part of this.
Private equity has no exchange, so liquidity is low, but this also means there is no correlation with the stock market. Of course, after going public, movements influence the market, but whether the investment succeeds depends largely on whether the target company grows.If there are investment deals, one should carefully examine whether the company will grow in the coming years, how much of the market it could capture, and whether it has explosive potential to disrupt existing services. Since there are few deals, good opportunities tend to fill up quickly.
As a side note, recently in venture circles, entrepreneurs boast about “recently raising one hundred million yen” or “received investment from a famous angel investor,” and so on. It’s impressive, but I’d rather they boast about their service rather than fundraising amounts.
【Hiroshi Ichikawa】
Investment Techniques to Become Ultra-Wealthy
Representative Director of Winviser Co., Ltd. He worked at SMBC Nikko Securities at branches in Ibaraki, Fukuoka, and Tokyo, providing asset management consulting, then moved into marketing ultra-wealth financial products. He later moved to independent advisory and now focuses on private financial consulting for clients while supporting IFA (Independent Financial Advisor) businesses to help grow the industry in Japan.
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8. Upcoming Activities
◇ February 22 (Tue) around 8:15 a.m. (phone interview) Nikkei CNBC
【Activity Report】
◇ February 15 (Tue) from 20:00 Monex Securities-hosted: Explaining the appeal of the S&P 500 and wealth-building strategies for 2022
My first appearance as a lecturer for Monex Securities’ U.S. stock promotion project began in 2014, and this S&P 500 fund promotion project with eMAXIS Slim is in its fifth appearance in roughly six months.
In past appearances I’ve hit bumps at balance thresholds like 1 trillion yen or 2 trillion yen, but this time the milestone occurred right after crossing 1 trillion yen.
February 10, 2022, Mitsubishi UFJ International Investment Co., Ltd.
‘eMAXIS Slim U.S. Equity (S&P 500)’
Indicates the inaugural achievement of >1 trillion yen net assets for an index fund
Launched on July 3, 2018. Monthly net asset inflows averaged 11.5 billion yen in H1 of 2020, 20.8 billion yen in H2, and 42.4 billion yen in H1 of 2021. December 2021 assets reached 83.5 billion yen, roughly double the average monthly inflow for the prior year.
As of December 2021, the number of holders of this fund through major online brokers exceeded 1.56 million.
https://www.am.mufg.jp/text/release_220210_2.pdf
S&P 500 balance is a barometer of Japanese asset formation
Below are the top holdings of public funds in Japan and the U.S. (including U.S. ETFs). Japan’s top two are actively managed funds with balances over 1 trillion yen. The third is ARK’s “eMAXIS Slim U.S. Equity (S&P 500)” which I support.
Public funds total around 160 trillion yen recently. In the U.S., the amount of funds and ETFs linked to the S&P 500 is enormous. The largest fund balance is about 50 trillion yen, which is about one-third of Japan’s total public fund balance.
The balance of these index funds will grow about 10% annually due to index appreciation even without additional inflows. This suggests that Japanese asset formation correlates strongly with the balance of funds and ETFs linked to the S&P 500. If Japan had index funds or ETFs totaling 10 trillion or 20 trillion yen, asset formation for Japanese would be promoted to that extent.
Most active management underperforms the S&P 500
Japan has many active funds with small management balances. Their performance often lags far behind the S&P 500.
Fund managers should quickly abandon underperforming strategies and shift assets to S&P 500 index funds. This would be highly effective for individual asset formation. I am continually reminded of countless small funds in Japan and their mediocre performance.
Top 10 of U.S. and Japanese fund balances
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9. Q&A Corner
On a break
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★ For questions, please read the [Question Rules] below and email to
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