Leading European index provider Stoxx has licensed the iStoxx MUTB Japan Quality 150 Index to Mitsubishi UFJ Kokusai Asset Management (MUKAM) to underlie a new exchange-traded fund, the MAXIS Japan Quality 150 Index ETF (1460), listed on the Tokyo Stock Exchange.

The iStoxx MUTB Japan Quality 150 Index selects Japanese-listed firms based on fundamental qualities such as return on equity, leverage, cash flow generation and business stability.

The index captures the performance of quality companies with high profitability, low leverage and sustainable cash flows in Japan. It has been developed in collaboration with Japanese trust bank Mitsubishi UFJ. MUKAM is an asset management division of the firm.

“The iStoxx MUTB Japan Quality 150 Index offers a unique opportunity to track the performance of leading Japanese companies in terms of overall quality and stability of their businesses,” said Matteo Andreetto, newly appointed Chief Executive Officer at Stoxx. “MUKAM already chose this index as underlying for a passive fund last year and we are very pleased that they expand their offering with an exchange-traded fund now.”

Kazuto Kanai, Deputy General Manager at MUKAM, added: “In the Japanese equity market, the implementation of the Japan Stewardship Code and the increased focus on corporate governance is driving a need for companies to enhance their corporate “quality”. The iStoxx MUTB Japan Quality 150 Index that comprises of companies with sustainable high ROE provides a rules-based and transparent tool for both institutional and individual investors to participate in the performance of these companies.”

The index is derived from the Stoxx Japan 600 Index, the starting universe of eligible stocks. Each constituent of this index is evaluated based on a combined ranking of four fundamental factors – return on equity, debt-to-capital, cash flow generation and business stability. The 150 firms with the highest combined scores are chosen for inclusion in index, with constituents weighted by free-float market capitalization with a maximum single weighting of 2% applied.

The index is reviewed semi-annually in June and December and rebalanced quarterly in March, June, September and December. It is calculated in price, net and gross return versions and is available in EUR, JPY and USD.