Japan's first US equity ETF targets $300 million in AUM

Marking the first time that a Japanese ETF has referenced a US stock-market benchmark, Tokyo-based Simplex Asset Management has licensed the Dow Jones Industrial Average (DJIA) index as the underlying for an exchange-traded fund.  

The Simple-X NY Dow Jones Index ETF is scheduled to start trading on the Tokyo Stock Exchange on December 10. Simplex expects the product to attract ¥20 billion to ¥30 billion ($225 million to $338 million) in assets under management next year, says company spokeswoman Flora Cheung.

The most likely customers for the product are individual investors, as Japanese institutions already have methods of accessing US assets, adds Cheung.

Asked why a DJIA-referenced ETF has not launched in Japan until now, Cheung says it may be due to some regulatory and tax issue not being resolved or clarified in the past, thereby slowing the wider development of ETFs in the Japanese market. Certainly, the ETF market has taken longer to take off there than in some other Asian markets. Still, Cheung says Simplex expects more ETF products to be launched by different financial institutions.

There is currently only one DJIA-based ETF listed in Asia, on the Singapore Stock Exchange, says Dow Jones Indexes spokeswoman Nicole Wesch. She adds that there were $29.2 billion of assets under management linked to the index, including open interest, as of June 30. 

The DJIA tracks the stock performance of the 30 largest and most liquid US companies, meaning that Japanese market participants can now diversify their portfolios with US blue-chip coverage, says Michael Petronella, president of Dow Jones Indexes in New York.

Dow Jones was a relatively late entrant into Asia compared to rival index providers FTSE and MSCI, but it has been making efforts to catch up.

Part of the Simplex Financial Group, Simplex Asset Management has ¥102 billion in assets under management.