Source has launched the Source JPX-Nikkei 400 UCITS ETF, which provides exposure to the JPX-Nikkei 400 TR Index, a new benchmark for the Japanese equity market.
In recent history Japanese companies have typically held large cash reserves and delivered low shareholder returns relative to other developed markets.
The JPX-Nikkei 400 Index provides broad exposure, across the large-cap, small-cap, growth and innovation segments of the Tokyo Stock Exchange. However, unlike other benchmarks, it focuses on companies with the potential to generate shareholder value.
Developed by Nikkei and the Japan Exchange Group, the index selects stocks on the basis not only of size, but also return on equity, operating profit and corporate governance.
“This index has strong investor appeal,” says Michael John Lytle, chief development officer at Source. “It comprises companies that use their capital efficiently and meet global standards of corporate governance.”
Since its launch in January 2014, the JPX-Nikkei 400 Index has already been adopted as a benchmark by major institutional investors, such as Japan’s Government Pension Investment Fund.
“There are also signs that some companies are modifying their behaviour to ensure inclusion in the index,” Lytle says. “We have seen an increase in share buybacks and dividend payments, and more companies appointing external directors.”
“Source is delighted to be providing European investors with exposure to the JPX-Nikkei 400 TR Index,” says Source CEO Ted Hood. “Japan is an important component of the global equity market and, as such, we aim to deliver the highest quality exposure. It is interesting to see a benchmark that is not solely focused on market capitalisation gain such rapid acceptance.”
The Source JPX-Nikkei 400 UCITS ETF is denominated in JPY and will trade on Xetra in EUR and on the London Stock Exchange in both USD and GBP. It is registered for sale in Austria, Finland, France, Germany, Ireland, Italy (for institutional investors only), Luxembourg, the Netherlands, Norway (for institutional investors only), Switzerland (for institutional investors only), Sweden and the UK.
