A Closer Look at Japan's ETF Performance in 2013


The stimulus package introduced by Japan's Prime Minister Shinzo Abe has helped to propel Japan, the world's third-largest economy, to end the last trading day of 2013 with the Nikkei 225 index closing at 16,291.31 points, recording an impressive 57% increase in 2013, marking the index's biggest annual gain since 1972.

Based on our analysis of the ETF/ETP industry in Japan through the end of November 2013, it has seen a similar growth pattern with the assets under management (AUM) increasing by 56.7% from U.S. $49 billion to U.S. $77 billion. At the end of November 2013, the Japanese ETF/ETP industry had 128 ETFs/ETPs, with 166 listings, assets of U.S. $77 billion, from 17 providers on 3 exchanges.

The compounded annual growth rate (CAGR) in AUM in the ETF/ETP industry in Japan over the prior 10 years was just 8.9%. Just 5 years ago, at the end of 2008 the AUM in ETFs/ETPs in Japan was just U.S. $28 billion.

Year-to-date through the end of November 2013, ETFs/ETPs in Japan had net inflows of U.S. $14.7 billion which was significantly above the U.S. $9.7 billion of net inflows at the same time in 2012. The majority of the net inflows U.S. $13.5 billion went into Equity products.

The top 20 ETFs account for 97.7% of Japanese ETF assets. The largest ETF: Nomura Nikkei 225 ETF on its own accounts for 23.5% of assets. 19 of the top 20 ETFs track equity indices while 1 provides exposure to alternative asset class indices. Year-to-date through the end of November the top 20 ETFs have collectively gathered U.S. $14.6 billion in net new assets. 19 of the top 20 ETFs track equity indices while 1 provides exposure to alternative asset class index.

Nomura AM is the largest ETF/ETP provider in terms of assets with U.S. $36 billion, reflecting 47.3% market share; Nikko AM is second with U.S. $17 billion and 22.1% market share, followed by Daiwa with U.S. $17 billion and 22.0% market share. The top three ETF/ETP providers, out of 17, account for 91.4% of Japanese ETF/ETP assets, while the remaining 14 providers each have less than 7% market share.

ETFs assets are also growing when compared to mutual fund assets in Japan. At the end of 2008 ETF assets accounted for approximately only 4% of mutual fund assets having grown to 7.1% of mutual fund assets at the end of Q1 2013.

We will have the final year end 2013 statistics for ETFs/ETPs in Japan by mid-January 2014.

Top 5 ETF/ETP providers in Japan as of end of Nov 2013

Japanese ETFs

Source: www.ETFGI.com ETFGI, ETFG/ETP providers and Bloomberg.

Deborah Fuhr
Managing Partner

This commentary is published by, and remains the copyright of, ETFGI LLP ("ETFGI"). This commentary may only be used by the permitted recipients and shall not be provided to any third parties. ETFGI makes no warranties or representations regarding the accuracy or completeness of the information contained in this commentary.

ETFGI does not offer investment advice or make recommendations regarding investments and nothing in this commentary shall be deemed to constitute financial or investment advice in any way and shall not constitute a regulated activity for the purposes of the Financial Services and Markets Act 2000. Further, nothing in this commentary shall constitute or be deemed to constitute an invitation or inducement to any person to engage in investment activity. Should you undertake any such activity based on information contained in this commentary, you do so entirely at your own risk and ETFGI shall have no liability whatsoever for any loss, damage, costs or expenses incurred or suffered by you as a result.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , ETFs , Earnings , International

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Deborah Fuhr

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