Nomura is pushing its Next funds range in Europe with the listing of four exchange-traded funds (ETFs) on the SixSwiss Exchange. Investors can now get Ucits ETFs exposure to the Nomura JPX-Nikkei 400 Daily EUR-Hedged Index, the Nomura JPX-Nikkei 400 Daily USD-Hedged Index, the Nomura Nikkei 225 USD-Hedged Ucits ETF and the Nomura Nikkei 225 EUR-Hedged.
Nomura Alternative Investment Management (Naim) is also pitching Quantam SolCap Europe, a new fund targeted at institutional investors in the main European markets, offering long-only exposure to the EuroStoxx 50 Total Return index. As the first Asia-headquartered issuer to list ETFs on the Six Swiss Exchange, the listing represents another step in the international expansion of Nomura's US$64bn Next funds range, according to Jean-Philippe Royer (pictured), chief executive of Naim.
"The listing in Switzerland follows the launch of Nomura's Next funds range on the London Stock Exchange (LSE) in Ucits and ETF versions last year, and reflects our intention to expand our offering to other European markets," said Royer. "Switzerland is a key market for us and one of the biggest markets in Europe for ETFs. Being fully efficient in this market in terms of distribution requires an active presence in the local exchange. This allows us to reach banks and regulated clients as well as insurers and unregulated clients and so we decided at the end of 2015 that we would move into the Swiss ETF market with our full capacity."
The ETFs on Six will track the performance of the JPX-Nikkei 400 Total Return and Nikkei 225 indices in currency-hedged versions. Offered in euro-hedged and US dollar-hedged formats, the ETFs allow investors to gain exposure to Japanese equities, while reducing the impact on their portfolios of potential yen depreciation against those currencies, said Royer adding that Japan continues to be an appealing investment theme and is back on the map for asset allocators seeking to diversify their investment portfolios
"The recent economic policies implemented by the Japanese government and the Bank of Japan are very positive and will support the domestic equity market," said Royer. "Despite the volatility of the market, it should boost trading activity and call the attention of international investors looking for exposure to Japanese equities with some form of currency hedge. We have a leading position in the ETF Japanese market and unparalleled expertise, so Nomura is well-placed to provide access to Japan's equity market through our suite of products."
Royer said that the offering in Europe will be limited to physical replication and the Japanese bank has no plans to replicate its Tokyo-domiciled ETF range which includes some synthetic structures. "We want to deliver access to the Japanese equity market through physical replication with FX hedging but with a very low tracking error," said Royer. "We believe this is a very unique selling point, adding real value to investors in the current ETF competitive landscape."
ETF activity continues to be driven mainly by institutional investors despite increasing traction among wealth managers and banks serving private investors, according to Royer. "We hope this will also be reflected in the uptake of ETFs by retail clients as a very good complement to our natural institutional investor base," said Royer. "We are committed to the Swiss market and want to be close to our clients in any market where we are present."
"Not everybody in Europe knows that Nomura is the sixth-largest ETF provider globally, with close to US$65bn of assets under management (AUM) as at the end of December 2015, which places us above many European competitors", said Royer, pointing out that competition will not be a deterrent as the Japanese bank has a more than 20-year track record in this market.
"As in any other European market, Switzerland is a very competitive market but we see it as an opportunity," said Royer. "We launched our first ETF tracking Japanese equities in 1995, and we have a remarkable record on ETF Japanese-domiciled products. Nomura's Next Funds ETF represents 50% of the overall Japanese ETF market. We want to leverage our knowledge of managing Japanese and Asian underlyings, and our expertise in pure physical replication."
Nomura Asset Management (Nam) and Naim will manage the ETFs. Nam is one of the largest asset management companies in Japan, with assets under management in excess of US$300bn. Naim is a London-based quantitative investment manager of the Nomura group.
There are 23 live products from Nomura sold among European investors, SRP data shows.
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