SAKURAI At Sony Bank, securitisation, mainly RMBS [residential mortgage-backed securities] is the main product we deal with in the Australian dollar market. But we also invest in vanilla credit bonds. We look at the spread situation for securitisation product and vanilla bonds, and we choose whatever is appropriate for investment. Nevertheless, our main investments have been in securitisation product.

Our funding comes from retail deposits so the currency situation is relevant. If Australian dollar deposits decrease we have less appetite for Australian dollar investments, whereas if there are more Australian dollar deposits coming in we will put our foot on the accelerator and invest more in this currency. Because our investment is based on Australian dollar deposits, we do not hedge.

AIBA Just like Sakurai-san, at SBI Sumishin Net Bank we receive foreign currencies such as Australian and New Zealand dollars. We buy securitisation products, and in Australian dollars we also invest in some corporate bonds. With regard to securitisation products – which we focus on – the background is that the level of risk is low and we can get spread. All our assets are denominated in foreign currencies so we don’t do any hedging.

KIM Mitsubishi UFJ Asset Management manages mutual funds. This means we have many mandates in our portfolio: some funds come from retail clients, others from institutional investors. Half our investments are currency hedged, the other half is not hedged. However, whether or not to hedge is not a strategy decision – it is decided in the mandate and we don’t have any power to change this.

We have a dedicated Australian dollar fund invested in government, semi-government and SSA [supranational, sovereign and agency] issuers. It is almost ¥30 billion (US$201 million) in size. We have many other global funds benchmarked to the MSCI World Kokusai Index.

These are active funds, which means we have the power to overweight or underweight Australian dollars. Most of these funds invest in government bonds while some also invest in semis and SSA issuers – for the yield pickup they offer.

Our retail clients have traditionally been long-term investors with slow redemptions – after 10-20 years. However, our strategy here has changed over time, reflecting changes in these investors. There are more younger investors and they prefer stocks to fixed income. This is one reason for less investment in Australian dollars from some Japanese investors.

Regarding our institutional investor clients, there was a lot of redemption in 2023 but we didn’t observe the same movement last year. I think these investors will look for the chance to get into the Australian dollar market this year.

TOKUDA I’m in charge of Australian dollar investments at Sumitomo Life Insurance Company. We invest mainly in government and semi-government bonds, although we also have some Australian dollar SSA bonds in the portfolio. There are some hedged investments, but most are unhedged.

KOBAYASHI My responsibility at Asset Management One is advanced country fixed income, excluding Japan. Our customers are pension funds, financial institutions and retail investors, and I manage funds for all these customers. The benchmark is the MSCI World Kokusai Index, which we are trying to outperform. There are hedged and unhedged products, depending on the mandate.

As for Australia, we invest in government and semi-government bonds, and SSAs. Last year we did not invest aggressively in Australian dollar fixed income. However, now we are seeing a change in the environment so we are reviewing our investment stance toward Australia at the moment.

ANDO I work in the fixed-income department at Meiji Yasuda Life Insurance Company, specifically the foreign fixed-income investment group. This covers global bonds and FX transactions. We take different responsibilities to monitor and I have focused on Australia and New Zealand for the last 12 months.

Because we are a life insurance company, we have very long-term funding. This means we have the luxury to invest for the long term. In Australia, the yield curve is steepening at the moment and therefore we can take advantage of long-term opportunities.

Compared with the sovereign, if the ratings are good and the spread is attractive we try to get the carry from semi-governments such as TCV [Treasury Corporation of Victoria], TCorp [New South Wales Treasury Corporation], QTC [Queensland Treasury Corporation] and SAFA [South Australian Government Financing Agency].

Regarding FX, about 80 per cent or our holdings is open, the remainder is hedged. As Tokuda-san has said elsewhere in this discussion, we don’t think the yen will appreciate too much. Therefore, within the mandate policy, for the FX risk we can take we want to invest in an open, unhedged way.

UEDA Dai-Ichi Frontier Life Insurance Company looks at government, semi-government and corporate bonds in Australian dollars. We are a foreign-currency-denominated life insurance company and part of our funds is in Australian dollars, which means we do not hedge our investments.

SAKON I’m responsible for the foreign fixed-income investment team at Taiju Life Insurance Company, which includes executing our Australian dollar investments. Like Ueda-san at Dai-Ichi Frontier Life, our insurance products are denominated in Australian dollars. Therefore, we select investment products – such as sovereign and semi-government as well as SSA bonds – that are denominated in Australian dollars.

The duration of insurance products is 5, 10 or 15 years and we pick our fixed-income products to match this duration. As for hedging, there is some but foreign-currency-denominated insurance products are open investments without hedging.

KATAHIRA I work in the credit and structured investment team at Sumitomo Mitsui Trust Bank, focusing on fund finance and credit investment. For the latter, we mainly invest in securitisation products in the Australian dollar market. In other markets, we invest in loans, notes and CLNs [credit-linked notes] with foreign bank risk.

We have absolute targets for spread. In this context, Australian securitisation product is tighter than our target but, after considering relative value and duration, it remains attractive to us. We will continue to focus on this product.

Regarding hedging, we don’t have enough foreign-currency deposits and mainly rely on funding from the market. The market business division within the bank manages our funding and hedging activity.

FUND MANAGER I am a bond portfolio manager. My role is investing in global products. Overall, at the company, we have a variety of mandates that allow us to invest in sovereign, semi-government and corporate bonds, including REITs. This also includes Australian RMBS and Australian infrastructure companies.

With respect to the global interest rate situation, our Australian dollar position tends to be small. There is not much need for Australian dollars. When we do invest, depending on the customer’s mandate, semis and corporates are the products we invest in most.

Hedging depends on the customers. Our customers are Japanese clients so we mainly have unhedged investments, but it really depends on their needs. We offer full, partial, active and rule-based hedging.

With regard to RMBS, we meet with issuers as much as possible. We like to visit sites to understand the situation before making an investment. As a result, I visit Australia once a year. Within RMBS, there are lot differences between cities so we look at the housing market in general as well.