BNP Paribas launches quality Japan ETF on Xetra

May 30th, 2017 | By | Category: Equities

BNP Paribas has launched the BNP Paribas Easy iSTOXX MUTB Japan Quality 150 UCITS ETF (Xetra: ISTM) on Deutsche Börse’s platform. The smart beta ETF tracks Japanese stocks that have high exposure to the quality factor.

BNP Paribas launches quality Japan ETF on Xetra

The ETF uses four fundamental ratios to select high quality Japanese stocks.

The underlying index of the ETF is the iSTOXX MUTB Japan Quality 150 Index, which was launched in August 2015 in collaboration with Japanese bank Mitsubishi UFJ Trust and Banking Corporation.

The index captures the performance of the 150 Japanese equities in the STOXX Japan 600 ex-REITs with the highest combined ranking of four fundamental ratios: return on equity, debt-to-capital, cash flow generation ability and business stability.

When calculating the composite score, return on equity is given twice the weighting of each of the other three fundamental ratios.

The index is market capitalisation weighted and reviewed semi-annually. Stocks need to fulfil minimum liquidity criteria before being added to the index and individual weights are capped at 2% on a quarterly basis.

The largest stocks in the index are currently Recruit Holdings (2.38%), Kao (2.19%) and Fanuc (2.15%) (as of 30 May). The largest sectors represented are industrial goods & services (24%), automotive (11%) and personal & household goods (11%).

Over the three years to 28 April, the index returned 13.4% per annum with annualised volatility of 20.7%, compared to the 10.5% returns and 20.6% volatility seen by the STOXX Japan 600 Index.

The ETF has an estimated ongoing charge of 0.30%.

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