Money Design has launched an exchange-traded fund (ETF) wrap service in Japan to offer customised investments which will include synthetic ETFs. The introduction of the new service has been motivated by the depreciation of the Japanese yen and increased investments in global multi-asset strategies.
“Considering the fact that Japan is dependent on the import of commodities and energy, as well as the inflation that is expected to be triggered by the depreciation of the yen, the wrap service allows individual investors to access global diversified investments to reduce risk just like institutional investors do,” a Money Design spokesperson told SRP.
Given Japan’s heavy reliability on importing resources, preserving the asset value of commodities would be a concern for investors and synthetic ETFs could provide a way to address this, said the spokesperson. “However, rather than investing in ETFs with swaps that are embedded with counterparty risk, settlements excluding maximum risks such as employing listed futures would be our choices,” she said.
Japanese investors have shown an increasing interest in customised portfolios, and the ETF wrap service is seen as an alternative for investors to satisfy that demand via transparent and low cost structures. “The customisation of the fund wrap service is relatively limited for investors as usually they could only pick from several restricted patterns,” added the spokesperson, who stressed the high liquidity and low trading cost of ETFs.
Money Design’s ETF wrap service offers access to more than 5,000 ETFs worldwide. The average management fee for investment is 0.25% while running costs are between 0.5% and 1%.
According to ETFGI, the Japanese ETF industry comprises 120 ETFs worth $84bn.
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