Japan-based Mitsubishi UFJ Financial Group (MUFG) recently announced its plans to bet ¥1 trillion into a new investment team, according to the media. The team will help the bank to buy credit, equities and alternative assets and lift investment returns.
MUFG expects to start buying assets in the second half of 2021. The assets will primarily focus on the US securities market. Yoshiaki Nemoto, head of the group and his team, will manage a new investment account that is different from the bank’s conventional securities portfolio. Yoshiaki expressed that he aims to grow assets to about ¥1 trillion within the next three years.
Yoshiaki further added that his team stresses diversification and will be considering buying assets from real estate investment trust, equity and corporate bond funds. Though the company’s portfolio will be varied geographically, he said that the US would mostly take up a large portion because of its relatively bigger market size.
The firm is looking for ways to boost returns as low global interest rates and a hefty surplus of bank deposits endure simultaneously. Another critical factor is that other banks of the country have also signalled efforts to seek higher-yielding assets. This is because the lenders are facing a sharp spike in excess cash during the Covid-19 pandemic. MUFG’s move is expected to bring scrutiny from investors.
Japanese analysts consider the new investment plan to carry higher risk weights and raise concern over its effects on its ability to boost future dividend payouts. The firm said that risk control is critical for the team and is also a reason for the slow process of building up assets.