Japan's Kokusai Asset Management, which manages the country's biggest mutual fund, may reduce its exposure to US and Japanese bonds while diversifying into Mexico, Poland and the Nordic countries to boost returns on its $19 billion bond fund.
Kokusai Asset's Global Sovereign Open fund, its 1.48 trillion yen ($18.8) billion flagship bond fund known as "Glosov" among Japanese investors, thinks there is little room to slash exposure to euro-denominated bonds further, the fund's head manager told Reuters in an interview on October 16.
"Speaking broadly, we've been reducing our exposure to the euro zone and the United States and shifted into countries such as Australia, but we want to diversify even further," Masataka Horii said.
The Global Sovereign Open fund added Mexican and Polish bonds to its holdings for first time ever this month. Kokusai included New Zealand in its bond portfolio in February after sharply slashing allocations to the euro zone last year due to Europe's debt crisis.
Kokusai Asset has been stepping up efforts to diversify following years of persistent outflows and as it struggles to achieve returns that beat a key industry benchmark.
The Global Sovereign Open fund's total assets have shrunk to one-fourth their peak of about 5.7 trillion yen in 2008, before outflows accelerated in the wake of the Lehman crisis.