BofA: Retail yen selling rises but offset by foreign inflows

Bank of America reports Japanese retail investors are increasing foreign asset purchases through investment trusts at an annualized pace of nearly ¥16 trillion, up from ¥6-7 trillion before the new NISA program launched in 2024.

The bank notes outward portfolio investment through investment trusts remains modest relative to Japan’s economy size when compared with Korea and Canada, according to its November 4, 2026 research titled "Japan’s household yen selling: Structural, but not overwhelming."

Japan’s portfolio investment is recording its largest net inflows on record, driven by foreign investors’ purchases of Japanese yen bonds.

Bank of America states an improving balance of payments and higher yen funding costs as the Bank of Japan raises rates could lead to lower foreign exchange hedge ratios.

Inflows into Japanese equity funds have accelerated this year. The funds have not yet taken market share from global equity funds.

Bank of America says the increased retail foreign investment creates a gradual headwind for the yen but does not imply a broader yen depreciation trend.