New York-based ETF provider Global X has entered into a joint venture with Tokyo-based Daiwa Securities to offer selected US-listed Global X ETFs in Japan.
Luis Berruga, CEO at Global X.
The new Japanese entity will be known as Global X Japan and will be headquartered in Tokyo.
The joint venture comes just 18 months after Global X was fully acquired by Asian financial services business Mirae Asset Global Investments.
The acquisition gave Mirae a significant footprint in the US ETF market, while the firm already enjoys a presence in Canada (Horizons), Australia (BetaShares) and South Korea (Tiger ETF).
Global X ETFs
The new Japan-based entity will seek to leverage Global X’s product development experience in areas such as thematic investing, income investing, and international exposures.
Global X currently manages over $10.7 billion across some 69 ETFs, including 19 commanding over $100 million in assets.
Its largest fund is the $1.4bn Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ US) which provides exposure to developed market stocks of companies poised to benefit from growth in robotics and artificial intelligence.
Within its thematic suite, Global X also offers sizable funds targeting developments in cloud computing and fintech – these are the $490m Global X Cloud Computing ETF (CLOU US) and $420m Global X FinTech Thematic ETF (FINX US).
The firm is also known for its range of income-focused ETFs. These include the $910m Global X SuperDividend ETF (SDIV US) which invests in 100 of the highest dividend-yielding securities globally, as well as the $520m Global X SuperDividend US ETF (DIV US) which covers 50 high dividend stocks from the US equity universe.
Japan ETF growth
ETFs in Japan have more than tripled their assets since 2014 and currently house over ¥35 trillion ($326bn), as of the end of July 2019, according to research from Cerulli.
Institutions, mainly financial institutions such as the Bank of Japan which started purchasing ETFs in 2010 as a monetary policy tool, currently represent 93.9% of total ETF assets in Japan.
Although institutional investors account for the bulk of assets, retail participation is set to grow with industry efforts to increase the availability of low-cost products.
Japan’s ETF market is also poised to benefit from the recently launched Japan-China ETF Connect scheme which aims to boost cross-border investment by linking the ETF markets of the Tokyo Stock Exchange and the Shanghai Stock Exchange.
In order to tap into future ETF industry growth in Japan, the joint venture will seek to harness Daiwa’s local knowledge of operating financial institutions in Japan, especially in areas such as wealth management, brokerage services, and retail distribution.
Industry views
Luis Berruga, CEO at Global X, commented, “This is an incredible and exhilarating time to be involved in the global ETF business. We’ve seen how astonishingly fast this space can evolve as investors have eagerly embraced ETFs over the last decade. In close collaboration with Daiwa, we’ll have the opportunity to extend that experience to a large and growing market that we believe will be well served by our differentiated offerings.”
Koichi Matsushita, Deputy President and Head of Asset Management Division at Daiwa Securities, added, “We are thrilled to be collaborating with Global X, a leader in ETF development with a well-recognized brand around the globe. We have long been advocates for ETFs in Japan, and see vast opportunity for expanding the offerings available to investors across the country.”