Tokyo: Kokusai Asset Management, the operator of Japan's biggest mutual fund, said on Friday it had added New Zealand to its portfolio for the first time after sharply reducing exposure to euro zone bonds last year on Europe's debt crisis. 

Kokusai Asset's Global Sovereign Open, its $22.5 billion flagship fund also known as "Glosov" among Japanese retail investors, now has a 0.4 percent weighting for New Zealand, composed of cash and bonds. 

"In the past, our fund refrained from investing in New Zealand due to its size of the economy relative to others, but we have decided to start investing in the country on the back of its high credit ratings and healthy macro economics," the asset manager said. 

It was the first new country to be added to Kokusai's portfolio since May 2009 when it included Greece and Portugal.  

Europe's sovereign debt woes meant Greece was quickly removed in December 2009 while Portugal was removed in June 2010. It dropped France, Italy, Belgium and Spain last year. 

As of Thursday, the fund's weighting for euro zone bonds was a mere 9.2 percent, down from a peak of 43 percent in late 2009 and also below the benchmark Citigroup World Government Bond Index weighting of 27 percent. 

The fund now holds bonds of only three euro-zone countries in its portfolio -- a holding of 5.9 percent in German bonds, 2.9 percent in Dutch bonds and 0.9 percent in Finnish bonds. 

The Global Sovereign fund is an actively managed mutual fund that invests in global government and agency bonds with high credit ratings.  

The fund has struggled to attract money from retail investors over the last several years, hurt by its poor performance stemming from the crisis in Europe. 

Its asset size peaked at around 5.7 trillion yen ($72 billion) in 2008, but it saw outflows after the Lehman crisis of that year.