The current investment performance is greatly affected by the weak yen… “Is it safe to choose NISA and Orkan?

What should I invest in with my NISA?” — What is always mentioned in this theme is index funds such as [All Country] and [S&P500]. Internet articles and social networking sites are lined with words of praise, as if there is no other choice. However, experts point out that there is a “weak point” that has been obscured by all the high praise.

Unusual “Orcan popularity” revealed by the NISA relaunch

The renewed “NISA” started in January 2012. It has immediately had a major impact on the financial markets. The domestic investment trust market saw an excess inflow of 1,310.7 billion yen in January alone. With the addition of rising domestic and international stock markets, the total net asset value of publicly offered additional stock investment trusts in Japan (excluding ETFs) at the end of January reached a record high of 111.5956 trillion yen.

The sources of inflows were also eye-catching. The top fund inflow was “eMAXIS Slim Global Equity (All Country)” (“Orcan”) with 343.9 billion yen. This is an unusually large amount for a single month for an existing investment trust (fund), not a newly launched fund. Although it was expected to become popular, this is an unprecedented amount of money. In second place was the “eMAXIS Slim US Equity (S&P 500)” with ¥209.0 billion, which was also not far behind.

In addition to the “eMAXIS Slim” series, there are also “Global Equity” and “S&P 500” index funds sold by other companies, both of which have seen considerable inflows. In total, more than half of the approximately 1.3 trillion yen of new retail funds have flowed into these two types of index funds.

The overwhelming performance of Orcan and the S&P 500

An index fund is an investment trust that aims to invest in an index such as a stock price index. As its name suggests, the index used by Orcan is the MSCI All Country World Index, which covers the world’s stock markets, including emerging markets. And [S&P500] is the name of the index, which is composed of 500 stocks representative of the U.S. market.

What are the reasons why these two are overwhelmingly supported by individual investors among the many index funds? First of all, they have excellent past performance. Orcan’s three-year gain through the end of January 2012 was +68%, and its one-year gain was +32%. The S&P 500 has recorded a three-year increase of 91% and a one-year increase of a whopping 41%.

Given such high performance, since last year, financial experts and individual investors have been unanimously commenting in the media and on social networking services that “if you want to invest in NISA, it should be in Orcan or S&P500. This was a strong response from those who wanted to start a NISA but did not know what to invest in.