Mutual Funds : Retire Japan

Reference: https://www.retirejapan.com/blog/buying-japanese-mutual-funds/

Important points:

  • better option than US – ETF for JP residents
  • main advantages of mufu in JP
    • low fees, can get
      • cheap / attractive cost
        • in lots of 1 yen (if stock or ETF: unit cost thousand times of Mufu)
        • no need to buy the whole shares
      • no additional charge for buying/selling shares
        • purchase fees: no
          • no need fee to buy ETF
        • redemption fees: no (no load, ノーロード, noo roodo)
      • annual cost: very low
      • no currency conversion & currency conversion back
        / no incur fees (no change money from yen to dollar)

        • because mufu can be bought in JPY
      • tax:
        • US withholding taxes on any dividends: no
    • convenience / ease of access
      • can be bought any time (processed once a day)
      • no additional steps / extra procedures (compared to when buying US ETF)
    • flexibility to choose between
      • receiving dividends
      • reinvesting
  • payment option:
    • dividends 受取型 : uketori gata
    • reinvest 再投資型 : saitoushi gata
  • type investment:
    • regular 積立 : tsumitate
      • set up money then forget about it
      • broker will take money from the account & buy a set of investment each month
  • recommended Mufu:
    • no-load
    • index-based
    • low annual fees
  • type of Mufu / option focusing on different market:
    • all-world equities / global equities
    • Japanese bonds
    • developed world equities
    • emerging market bonds
    • etc
  • recommended portfolio:
    • 10% in Japanese assets
  • example:
    • cheapest emerging market equity funds 
      • charging fees around 0.2% a year (no purchase fees, no redemption fees)
    • no load : hanbai tesuuryou nashi 販売手数料なし
    • foreign equities : kaigai kabushiki 海外株式
    • index-based : indekkusu gata インデックス型
    • emerging market : emaajingu / shinkoukoku エマージング（新興国)
    • annual fees : tesuuryou nado 手数料等
  • type of accounts:
    • taxable
    • iDeco: can only purchase mufu
    • NISA
      • tsumitate NISA : can only purchase mufu
  • to put it briefly, mufu:
    • simple, low-cost portfolio
    • invest regularly over the long term
      • should do pretty well
  • Related terms:
    • 投資信託 toushi shintaku : mufu (mutual fund)
    • 投信 toushin : investment trust / mufu
    • 分配金 bunpaikin : dividend (on shares)
    • 隔月 kakugetsu : bimonthly
    • 買付 kaitsuke : buying, purchase
    • 販売手数料なし hanbai tesuuryou nashi : no sales commission / fee
    • 海外株式 kaigai kabushiki : overseas stocks / foreign equities
    • インデックス型 indekkusu gata : index-based
    • 新興国 shinkoukoku : developing country, emerging nation/market
    • エマージング emaajingu : emerging
  • Glossary
    • Mufu
      • popular investment option
      • indiv. combine/pool their funds to purchase a mix (diversified portfolio) of
        • stocks
        • bonds
        • other securities
      • these funds are managed by a prof. invest. company (with expertise in invest. manag.)
    • no load: no extra fee when buying/selling
    • index-based –> financial market index
      • effective type of investment
      • either Mufu or ETF
      • designed to closely track the components of 
        • a financial market index
      • good choice for beginner
    • ETF
      • exchange-traded fund
      • versatile type of investment security
      • comprise a collection of indiv sec., such as stocks
      • often mirroring a specific market index
    • emerging market:
      • high returns, higher risks
    • dividends:
      • periodic payment
      • made by a corporation to its shareholder
      • in the form of cash or additional shares
    • redemption fee:
      • fee when shareholders selling their investment
        • imposed by a mufu