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Nikko AM to list yen-hedged ETF linked to S&P 500 Index


Nikko Asset Management (Nikko AM) is to launch a new ETF linked to the S&P 500 Index with a currency hedge for the yen. The ETF is due to launch on 31 July and be listed on the Tokyo Stock Exchange on 3 August.

The Listed Index Fund US Equity (S&P500) Currency Hedge provides a yen hedge on the US dollar–denominated value of the S&P 500, a core US equity index and Nikko AM says it will be the first Japan-listed ETF of its kind.
The company’s current ETF offerings include the Listed Index Fund US Equity (S&P500), which is linked to a yen-converted S&P 500.
The new ETF was developed in response to requests from institutional investors who want exposure to US equities that is not vulnerable to currency fluctuations. The price fluctuations of the new ETF and that of the existing unhedged offering differ greatly. Nikko AM says the two funds have a low correlation, which makes the new ETF effective for investors seeking diversification in their investment portfolio.
Listed Index Fund US Equity (S&P500) Currency Hedge is a cash creation/cash redemption type ETF, in which cash payments are made into the fund at its creation or time of subscription and payouts are made at the time of redemption or cancellation. Compared to an in-kind type of ETF that pays out cash equities at the time of creation and receives cash equities at the time of exchange, this type of instrument is convenient for financial institutions and other institutional investors because the minimum cash requirements at the time of creation and redemption are relatively low and there are relatively few days when transactions can’t be executed.
Nikko AM has proactively developed various types of ETFs to meet the needs of investors and will continue to build a diversified and robust portfolio of investment products that provide clients with a broad range of opportunities.

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