The Nikkei 225 or the Nikkei Stock Average has been a premier stock market index for the Tokyo Stock Exchange since 1950. Sponsored by Nikkei Inc, a leading business media provider in Japan, Nikkei 225 is the most widely quoted index of Japanese equities. It mostly trades in global markets with ETFs and futures contracts.
There are a number of ETFs that invest in different sectors of the Japanese economy tracking the Nikkei 225. Amongst the known ETFs are the Nomura ETF Nikkei 225 (1321:JP), Daiwa ETF Nikkei 225 (1320:JP) and ETFs with foreign presence including Barclay’s Global Capital’s iShares Nikkei 225 ETF listed on the Deutsche Borse of Germany and ComStage ETF Nikkei 225 (C020:TH) by Commerzbank AG.
Nomura ETF – Nikkei 225 (1321:JP) tracks the price and yield performance of the Nikkei 225 index that lists the investment performance of 225 stocks. This ETF has an indefinite term and is an open type stock investment fund. The object of the fund is to invest in the Nikkei 225 component stocks to construct a portfolio similar in composition to the Nikkei 225 index.
The expense ratio is set at 0.22% with total assets of JPY 559 million. The ETF has holding in financial services, real estate, consumer services, healthcare, industries, energy, utilities and technology.
Daiwa ETF – Nikkei 225 (1320: JP) tracks the same Nikkei 225 index with total assets of over JPY 218 million. It has major holdings in financials, consumer services, materials, industries, healthcare, energy and utilities.
iShares Nikkei 225 (DE) is issued by BlackRock Asset Management in Germany. Tracking the Nikkei 225 index it has a total expense ratio of 0.52% and total assets of over JPY 226 million. DE has holdings in industrial goods and services, technology, healthcare, automobiles and parts, retail and telecom with the highest share in industrial resources of 27%.
The number of ETFs that tracked the Nikkei 225 were available to Japanese investors only. With the global tracking commencing some ETFs with a foreign presence are specially targeting the Nikkei 225. Recently NEXT Investments, Bedminster NJ based ETF consulting firm has offered the first US listed ETF based on the Nikkei 225. This is proposed to be equivalent to the S&P 500 ETF.
After the recent earthquake the Nikkei 225 had been performing low. The market is now starting to stabilize but the 6.9% decrease since the event in trading volume has affected the ETF market as well. In 2010 many investors placed their bets at the worst time in Japanese ETFs benchmarking Nikkei 225 index. The incident took away more than $650 billion of shareholder’s wealth in dumps.
iShares MSCI Japan ETF (EWJ) although not tracking the Nikkei ETF has affected its performance since and before the incident of earthquake. Although many investors considered it safe to invest in the Nikkei ETFs but trends showed EWJ to be more resistant bouncing up for traders while the Nikkei remained pressurized by its flat line of resistance. However, situation is coming under control by the stability shown by the ETF market of Japan.