Nikko Asset Management Launches Japan High-Dividend Low-Volatility Smart Beta ETF

Focusing on demand for exchange traded funds that offer high dividends at lower volatility, Nikko Asset Management announced today that it is offering a smart beta ETF linked to a customized MSCI index designed for this purpose. This new ETF, Listed Index Fund MSCI Japan Equity High Dividend Low Volatility, will be listed on the Tokyo Stock Exchange on December 1.

“With the rapid growth of the Japanese ETF market, institutional and retail investor requirements are now more sophisticated. We are focusing on the growing demand for funds that offer high dividends with low volatility,” said Hideo Abe, executive vice chairman of Nikko Asset Management. “This ETF clearly differentiates itself from other Japanese equity index funds that track the TOPIX or Nikkei 225, or existing high-dividend ETFs. From the perspective of both convenience and fund-management performance, we are confident it will deliver added value for investors.”

Portfolio construction for the new ETF is based on investing in the components of the recently developed MSCI Japan IMI Custom Liquidity and Yield Low Volatility Index in order to closely track the movement of stocks offering higher dividend yields at lower volatility. Restricting the eligible universe to stocks that combine relatively high dividend yields with a given level of liquidity, the smart beta index employs a weight optimization approach that aims to minimize overall price volatility. The weight for each individual share can only vary between 0.05% and 1.00% of the total. Another core characteristic is that the index excludes all financial stocks such as banks, insurers or brokerages, in addition to J-REITs (real estate investment trusts). Total holdings in the linked High-Dividend Low-Volatility ETF is expected to be around 120–130. Holders of the ETF will receive dividends four times each year in January, April, July, and October.

Having taken the initiative in creating a range of ETFs tailored to the needs of every investor, Nikko Asset Management continues to develop products to provide a broad range of investment opportunities.

 

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