Stoxx and Mitsubishi UFJ team up on Japanese smart beta equity index

Aug 4th, 2015 | By | Category: ETF and Index News

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Stoxx, a leading European index provider, has announced the launch of the iStoxx MUTB Japan Quality 150 Index tracking the performance of profitable Japanese companies with low leverage and sustainable cash flows. This index can be used for performance measurement and provide the basis for exchange-traded funds (ETFs).

Stoxx, MUTB launch quality based smart beta index

Hartmut Graf, Chief Executive Officer of Stoxx.

Developed in collaboration with Japanese bank Mitsubishi UFJ Trust and Banking Corporation, the launch marks the start of a partnership to create and market smart beta indices.

Historically, a lack of investment and poor capital allocation has led to reduced profitability for many Japanese companies. The index’s strategy is based on the premise that the structural reforms underscoring the Japanese corporate sector will benefit companies with quality underlying fundamentals.

“The Japanese government’s efforts to stimulate the economy includes the motivation of companies to improve their return on equity. With the newly launched iStoxx MUTB Japan Quality 150 Index we offer local as well as international market participants an innovative, rules-based tool to participate from the performance of such companies,” said Hartmut Graf, Chief Executive Officer of Stoxx.

Tatsuo Wakabayashi, President of Mitsubishi UFJ Trust and Banking Corporation, added: “The iSTOXX MUTB Japan Quality 150 Index is comprised of companies able to sustain growth in corporate value, and was developed based on the experience we have built up through our active quantitative investment strategies, and Stoxx’s experience in indexing. We are looking forward to continuing to develop new smart beta index strategies in collaboration with Stoxx. We hope these new indices will draw interest in Japanese equities investment from both Japanese and overseas investors.”

The components of the index are selected from the Stoxx Japan 600 Index based on fundamental measures of quality. A ranking is made based on four measures: return on equity, debt-to-capital, cash flow generation ability and business stability. Adequate liquidity is ensured through the application of a liquidity screen. The top 150 stocks from this selection methodology are then eligible for inclusion. The index is weighted by free-float market capitalisation, with a weight cap of two percent applied to each component.

The index is calculated in price, net and gross return versions and is available in EUR, JPY and USD. Daily historical data is available from June 18, 2001.

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