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Japan Retail Fund Market Trends 2026: What’s Driving NISA’s Growth?
Key Takeaways
- Assets held in new NISA accounts reached JPY 29.8 trillion at year-end 2025, more than doubling from a year earlier.
- Despite continued adoption, 37.8% of NISA accounts remained inactive, highlighting the challenge of account engagement.
- Low-cost index funds continued to dominate the rankings of funds attracting the largest net inflows during the first half of 2026.
The Nippon individual savings accounts, or NISA, is a Japanese government tax-advantaged account meant to help residents save and invest. Assets in Japan-domiciled, publicly offered open-end equity investment trusts exceeded JPY 200 trillion in May 2026.
While NISA assets expanded during the first half of 2026, account utilization remained a challenge, with a large share of NISA accounts showing no investment activity.
Morningstar’s latest report analyzes factors including asset growth under the NISA program, account usage, fund flows, and developments across asset classes and fund categories. For asset managers, these trends provide valuable insights into investor behavior and product demand as firms compete for NISA-related assets.
NISA Assets Have More Than Doubled
Assets held in new NISA accounts at securities firms reached JPY 29.8 trillion at year-end 2025, more than doubling from JPY 13.5 trillion a year earlier. Net inflows of JPY 11.1 trillion accounted for approximately 70% of the increase in NISA assets. The remaining JPY 5.2 trillion, or about 30% of the increase, can largely be attributed to market appreciation.
Drivers of NISA Asset Growth
By investment quota, the Growth quota held JPY 19.6 trillion at year-end 2025, while the Tsumitate (periodic investment) quota held JPY 10.2 trillion.
Although the Growth quota maintains a larger asset base because of its higher annual contribution limit, the Tsumitate quota has grown more rapidly through continued contributions.
Given that NISA was redesigned to support long-term wealth accumulation, redemption activity provides an important indicator of investor behavior. The overall redemption rate for new NISA accounts was 14.7% in 2025, largely unchanged from 14.4% in the previous year.
Millions of NISA Accounts Remain Inactive
Although the number of NISA accounts at securities firms reached 20.5 million, only 62.2% of those accounts recorded subscriptions during 2025, leaving the remaining 37.8% inactive.
The Tsumitate quota was used by nearly half the accounts, exceeding the usage rate of the Growth quota and suggesting that it continues to serve as an important entry point for many investors.
While approximately one-fourth of Japan’s population has opened a NISA account, the proportion actively investing through the program remains relatively limited. Account usage also differs significantly across age groups, with investors in their 30s recording the highest participation rate at 70.6%.
Working-age investors tended to make greater use of the Tsumitate quota, while older investors relied more heavily on the Growth quota.
NISA Continues to Drive Fund Flows
Net inflows into Japan-domiciled publicly offered open-end funds totaled JPY 12.3 trillion during the first half of 2026, substantially exceeding the JPY 7.9 trillion recorded during the same period a year earlier.
Monthly net inflows also remained strong throughout the period, exceeding JPY 1 trillion in each month from April through June and surpassing that level for 10 consecutive months since September 2025.
Top net flows funds
Low-cost index funds continued to dominate the rankings of funds attracting the largest net inflows during the first half of 2026. MUAM eMAXIS Slim All World Equity All Country ranked first with net inflows of JPY 2.25 trillion, followed by MUAM eMAXIS Slim US Equity S&P 500 with JPY 1.13 trillion. Combined, the two funds attracted JPY 3.37 trillion in net inflows during the period.
Flows by asset class and category
By asset class, equity funds remained the dominant destination for investor flows during the first half of 2026. Net inflows into equity funds totaled JPY 9.44 trillion, accounting for the vast majority of overall inflows.
Bond funds and REIT funds continued to experience net outflows, while allocation funds attracted positive flows, reflecting ongoing investor interest in diversification.
Net Inflows by Asset Class (JPY Billion)
Global equity and US equity ranked among the largest recipients of net inflows. Categories associated with investment themes and growth opportunities also attracted investor interest, reflecting strong flows into thematic funds focused on artificial intelligence, semiconductors, materials, and emerging markets.
Flows by Ratings
Funds with Morningstar Ratings of 5 or 4 stars continued to record significant net inflows. This suggests that investors are paying more attention to the historical performance when selecting funds, as evidenced by the net outflows from active funds rated with 1 or 2 stars.
However, it is also important to note that there is no guarantee that a fund that has performed well in the past will always perform well.
The Morningstar Medalist Rating consists of a qualitative assessment by analysts as well as a quantitative model—modeled after the analysts' assessment—and serves as the forward-looking assessment to compensate for such limitations.
By Morningstar Medalist Rating, Gold-, Silver-, and Bronze-rated index funds attracted large net inflows.
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