Global X debuts in Japan with two high income ETFs

Aug 26th, 2020 | By | Category: Equities

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Global X has made its debut in Japan with the launch of two income-focused ETFs on the Tokyo Stock Exchange.

Global X debuts in Japan with two high income ETFs

Global X has made its ETF debut in Japan, representing a further expansion of footprint for its Seoul-based owner, Mirae Asset Global Investments.

The Global X MSCI SuperDividend Japan ETF (2564 JP) provides exposure primarily to Japanese equities with high dividend yields, while the Global X Logistics J-REIT ETF (2565 JP) targets Japanese real estate investment trusts focused on logistics facilities.

The funds have come to market through Tokyo-headquartered Global X Japan, a new entity created through a joint venture between Global X and Japanese asset manager Daiwa Securities.

The launch represents a further expansion of footprint for Global X’s owner, Seoul-headquartered Mirae Asset Global Investments. Mirae, which acquired Global X in February 2018, already maintains an active ETF presence in Canada (Horizons ETFs), Australia (BetaShares), and Asia (Tiger ETF).

Japan dividend

The Global X MSCI SuperDividend Japan ETF tracks the MSCI Japan High Dividend Select 25 Index.

The index screens an initial universe of Japan-listed REITs and equities for size and liquidity thresholds while also removing securities with negative 5-year dividend-per-share growth. It then selects the two REITs and 23 equities with the highest dividend yields.

Constituents are equally weighted in the index, as of each quarterly reconstitution and rebalance, while each GICS sector is capped at 20% above its weight in the initial universe. During reconstitution, the methodology may exclude the lowest-yielding equities from any sector at risk of breaching its cap level and replace it with the next highest-yielding equity from a different sector.

The fund comes with an expense ratio of 0.39%.

There are several dividend-focused ETFs already listed in Japan. The cheapest is the iShares MSCI Japan High Dividend ETF (1478 JP) which costs 0.19% and houses ¥44 billion (approx. $410 million) in assets under management. Its underlying reference, the MSCI Japan High Dividend Yield Index, currently contains 49 securities (excluding REITs) which have been selected based on dividend yield and quality characteristics.

Logistics REIT

The Global X Logistics J-REIT ETF is linked to the Tokyo Stock Exchange REIT Logistics Focus Index.

The methodology screens the broad TSE REIT Index, which includes all REITs listed on the Tokyo Stock Exchange, for REITs that invest at least half of their assets in logistics facilities. A minimum of 15 REITs must be selected and the methodology may relax its 50% logistics-exposure requirement to meet this quota.

Constituents are weighted by float-adjusted market capitalization subject to a 20% cap per REIT. The index is reconstituted and rebalanced on an annual basis.

The fund comes with an expense ratio of 0.59%.

While this is the country’s first REIT ETF to specifically target logistics facilities, there are more than a dozen broad market REIT ETFs available in Japan. Daiwa, Nomura, and One AM all offer low-cost ETFs along this line with expense ratios of just 0.155%.

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