1 Japanese investors nearly single-handedly bought up two new mortgage securities-based mutual funds totaling $701 million, the U.S. Federal National Mortgage Association said.
2 The purchases show the strong interest of Japanese investors in U.S. mortgage-based instruments, Fannie Mae's chairman, David O. Maxwell, said at a news conference.
3 He said more than 90% of the funds were placed with Japanese institutional investors.
4 The rest went to investors from France and Hong Kong.
5 Earlier this year, Japanese investors snapped up a similar, $570 million mortgage-backed securities mutual fund.
6 That fund was put together by Blackstone Group, a New York investment bank.
7 The latest two funds were assembled jointly by Goldman, Sachs & Co. of the U.S. and Japan's Daiwa Securities Co.
8 The new, seven-year funds -- one offering a fixed-rate return and the other with a floating-rate return linked to the London interbank offered rate -- offer two key advantages to Japanese investors.
9 First, they are designed to eliminate the risk of prepayment -- mortgage-backed securities can be retired early if interest rates decline, and such prepayment forces investors to redeploy their money at lower rates.
10 Second, they channel monthly mortgage payments into semiannual payments, reducing the administrative burden on investors.
11 By addressing those problems, Mr. Maxwell said, the new funds have become 'extremely attractive to Japanese and other investors outside the U.S.'
12 Such devices have boosted Japanese investment in mortgage-backed securities to more than 1% of the $900 billion in such instruments outstanding, and their purchases are growing at a rapid rate.
13 They also have become large purchasers of Fannie Mae's corporate debt, buying $2.4 billion in Fannie Mae bonds during the first nine months of the year, or almost a tenth of the total amount issued.

Earlier this year , Japanese investors snapped up a similar , $ 570 million mortgage - backed securities mutual fund .
Japanese investors snapped up
why do the japanese love american mortgages?