Nikko launches yen-hedged Dow Jones ETF in Japan

Mar 25th, 2020 | By | Category: Equities

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Tokyo-headquartered Nikko Asset Management has launched a new ETF in Japan providing currency-hedged exposure to the Dow Jones Industrial Average (DJIA).

Nikko launches yen-hedged DJIA ETF in Japan

The new ETF will hedge currency risk between the yen and the US dollar.

The Nikko Listed Index Fund US Equity Dow Average Currency Hedge (2562 JP) has listed on Tokyo Stock Exchange and comes with an expense ratio of 0.33%.

The DJIA is a price-weighted average of 30 blue-chip stocks traded on the NYSE and NASDAQ.

Commonly known as the Dow, the index dates back to 1896 and was created by Charles Dow, a US journalist also known for starting the Wall Street Journal.

It is one of the oldest, single most-watched indices in the world and is seen as a barometer of the health of the broad US economy.

The original constituents were virtually all industrial in nature, reflecting the make-up of the US economy at the time. As the US economy has evolved, so has the constituents within the index.

Today the index comprises several financial companies, such as JP Morgan Chase and Goldman Sachs, as well as technology giants such as Intel, Apple, Microsoft, and IBM. Coca-Cola, Johnson & Johnson, McDonald’s, and Pfizer are also constituents.

The fund, which mitigates the risk of adverse currency movements between the yen and the US dollar, is the first ETF in Japan to offer currency-hedged exposure to the DJIA.

There are a further two ETFs that offer non-hedged exposure to the Dow – the $120 million Next Funds Dow Jones Industrial Average ETF (1546 JP) and the $10m Simple-X NY Dow Jones Index ETF (1679 JP) which come with expense ratios of 0.45% and 0.15% respectively.

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