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Economy

New-type ETFs linked to BOJ policy to debut

TOKYO -- A new type of exchange-traded fund will make its debut on the Tokyo Stock Exchange as early as next month in response to a recent monetary easing initiative by the Bank of Japan.

     Nomura Asset Management and Daiwa Asset Management have finished developing their new ETFs, which will incorporate stocks of companies that are willing to raise wages, expand employment and boost capital spending.

     The BOJ plans to purchase the ETFs at an annual pace of 300 billion yen ($2.68 billion) as part of its monetary easing policy. The Japanese central bank hopes the purchases will support companies aggressively investing in plants, equipment and human resources.

     On April 1, Nomura Asset Management and Daiwa Asset Management filed applications with the TSE for listing of their new-type ETFs. If the necessary proceedings go smoothly, they will be listed and start trading in mid-May.

     Nikko Asset Management and DIAM, another asset management firm, will likely see their new-type ETFs listed on the TSE sometime between late May and June. Mitsubishi UFJ Kokusai Asset Management is developing a similar instrument.

     The BOJ in December decided to add the new-type ETF purchase plan to its ETF-buying program, which operates at an annual pace of 3 trillion yen. The BOJ currently purchases only ETFs linked to the JPX-Nikkei Index 400.

     Based on newly developed stock indexes, asset management companies will decide what company stocks should be incorporated in their respective new-type ETFs.

     Daiwa Asset Management will develop a new stock index in partnership with MSCI, a major U.S. index provider, while Nomura Asset Management will do so jointly with other Nomura group firms.

(Nikkei)

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