What Mrs Watanabe can tell us about how to handle low returns

What Mrs Watanabe can tell us about how to handle low returns

Lessons from Japan: early experience of ultra-low rates now relevant to investors around world

In the early 2000s, global fund managers had to anticipate the every move of “Mrs Watanabe” — a woman who did not exist.

The period between 2002 and 2006, when the Bank of Japan’s zero-interest rate policy began to feel like a permanent fixture, was the heyday for this notional archetype of a conservative Japanese householder, dabbling in international markets to plug the gap left by low salaries and paltry interest rates.

Other countries may soon produce their own legions of market-moving retail investors as ultra-loose monetary policy spreads more widely across advanced economies.

“When growth, inflation and interest rates are low, savers have a tendency to export their capital to economies that are growing,” said Bob Michele, chief investment officer at JPMorgan