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Japan's Sumitomo Life will look to further increase holdings of longer-end JGBs and unhedged foreign bonds, such as U.S. dollar corporate bonds and Australian government bonds, this fiscal year, the company's chief fund manager said Thursday.
The group plans to increase longer-end JGB holdings by several hundred billion yen this fiscal year, building on an increase of JPY640 billion last fiscal year.
"The yields on longer-end JGBs have fallen but we would like to buy those bonds and plan to further increase purchases of longer-end bonds if their yields rise," Toshio Fujimura, general manager of Investment Planning Department at Sumitomo Life, told reporters.
Fujimura said that the balance of hedged foreign bonds this fiscal year is expected to fall by about JPY100 billion due to the redemption of U.S. Treasuries. He said the company was nervous about further unhedged Treasury purchases as yields are 'still low' and 'we expect hedging costs to rise further." He added that U.S. corporate bonds are more attractive assets than U.S. Treasuries.
Sumitomo Life plans to boost unhedged foreign bonds by about JPY100 billion this fiscal year after they increased by JPY960 billion last fiscal year. The plan reflects that the company doesn't expect the yen to appreciate against the U.S. dollar, he said.
The company expects the dollar to trade between JPY102 and JPY117 and the euro to move in a range of JPY115 to JPY145 this fiscal year. It sees the 10-year JGB yield to move between -0.1% and +0.25% and the U.S. Treasury 10-year yield to move in a range of 1.3% to 2.3%.
He expect expects new assets from insurance premiums this fiscal year to be half the size of last fiscal year of JPY1.87 trillion.
At the end of March, Sumitomo Life's assets are estimated at JPY34.64 trillion, up from JPY32.77 trillion at the end of March 2020.