ETF TV News #80 David Semaya, Executive Chairman & Representative Director and Junichi Kamitsubo, General Manager, Corporate Planning Dept at Sumitomo Mitsui Trust Asset Management Co., Ltd. (SMTAM) discuss listing their first ETF on the Tokyo Stock Exchange with Deborah Fuhr #PressPlay
Last week globally there were 33 new listings by 24 issuers on 12 exchanges and 10 new cross-listings, 5 closures, and 8 delistings.
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Issuers: Amplify ETFs, BNP Paribas Easy, CCB Principal Asset Management, China Asset Management, Engine No. 1, Excellence KSM, First Trust, GF Fund Management, Global X ETFs, Harfor Fund Management, Horizons ETFs, iShares, Itau Unibanco, Janus Capital, Maxwealth, Migdal, NH Investment and Securities, Psagot Mutual Funds, QR Capital, Samsung Asset Management, Sumitomo Mitsui Asset Management, Toroso Asset Management, WisdomTree, XP Inc
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Transcript of video:
Speaker 1 [00:00:03] Presented by Syntax Advisers
Deborah Fuhr [00:00:08] Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investments. I’m Deborah Fuhr and joining me today is David Semaya, executive chairman and representative director, and Junichi Kamitsubo, the general manager of corporate planning department at Sumitomo Mitsui Trust Asset Management in Tokyo, Japan. Welcome, David and welcome Junichi.
David Semaya [00:00:29] Thank you.
Junichi Kamitsubo [00:00:30] Thank you.
Deborah Fuhr [00:00:31] So, David, why don’t we start with you. You recently entered the ETF industry. Can you tell us why you decided now is a good time to do that?
David Semaya [00:00:40] Sumitomo Mitsui Trust Group runs about 1.1 trillion in assets under management. It must be the largest in AUM in terms of the asset management industry, not only in Japan, but probably in Asia. We’ve been really focused on ESG, the environment and sustainability for the last four to five years, and especially the last, I’d say two to three years, a lot of focus, a lot of energy and a lot of resources have been put into this effort. This particular ETF is an extension of our capabilities. It’s our first, we’re a very large index manager and we think it’s a natural extension of what we do.
Deborah Fuhr [00:01:17] Junichi, can you tell us about the ETF that you listed last week, please?
Junichi Kamitsubo [00:01:22] On June 23rd, the first ETF was listed on Tokyo Stock Exchange, which tracks S&P JPX Carbon Efficient Index. It’s a Japanese equity index designed to measure the performance of companies and their topics, while overweighting or underweighting, so those companies that have lower or higher level of carbon emission by unit of revenue. So as a result, it has a similar risk return characteristics of topics, but with a 19% improvement in carbon efficiency, so it can be useful as a tool for forming new core Japanese equity and also addressing climate change risk and as an extension or alternative to topics-linked tracks.
Deborah Fuhr [00:02:14] What type of investors do you expect wil invest in this product?
Junichi Kamitsubo [00:02:18] Oour first target is institutional investors, especially financial institutions in Japan. So many of them are using ETFs to construct Japanese equity or portfolio, such as topics ETFs and Nikkei 225 ETFs. We think this ETF can be an extension or alternative to those products and that it can be a useful tool for constructing new core equity portfolio that also address climate change risk. So our target is insurance companies, banks and also asset managers, who manage multi-asset products for institutional investors and wealth management. In addition, Sumitomo is a manager that has been managing a mandate of this index from the largest institutional investor in Japan, and have tripled more in the last two years, which is also very appealing to those type of investors.
Deborah Fuhr [00:03:25] And can you tell us a bit about the ETF industry in Japan?
Junichi Kamitsubo [00:03:29] My feeling is that it is not very active compared with the other areas on the globe, but actually the range of products are getting wider, especially among foreign assets, in bonds and foreign equities. But still there’s a very limited number of ETFs that are very successful in terms of our AUM and liquidity, and all successful members are almost all core equity products, topics ETFs, partly because BOJs are investing in those products. So our idea is very simple. Our Idea is to enter into the core equity products, proposing the new concept of core equity portfolio.
Deborah Fuhr [00:04:22] David, can you share with us your plans for the rest of 2021?
David Semaya [00:04:26] Last year in the industry here in Japan, it really was a transformative year. The online securities brokers really added many new individual accounts, surpassing more traditional face to face brokerages. And when that happens, not only do the end users execute individual stock transactions, but they naturally go to ETFs and thematic ETFs. And a lot of that volume did go overseas, but a lot of it also stayed here in Japan. And, as appropriate, when we see client interest, and we think there’s an opportunity, we will continue to use the ETF format, so nothing specific for this year, but I believe you’ll see more in the space from us over the next, let’s say, 18 months.
Deborah Fuhr [00:05:09] Thank you, David and Junichi, for joining me today. It was a great insight into what’s happening in Japan.
David Semaya [00:05:15] Thank you, Deborah.
Junichi Kamitsubo [00:05:16] Thank you.
Deborah Fuhr [00:05:17] Last week globally, there were 33 new listings of ETFs from 24 issuers on 12 exchanges. There were 10 new cross-listings. 31 of the products were focused on equity exposure. One was fixed-income, one was Bitcoin. The majority were thematic exposures, ESG, five of them are active.
[00:05:38] If we look year to date, there’s been 729 new listings. There’s been 795 new cross-listings and 214 closures. I think some interesting things would be that last week we had three new issuers, so you just heard from one in Japan, and another one is Engine No. 1 Transform 500 ETF. Their goal is to encourage companies to make changes in the way they behave. Another new issuer is QR Capital, which has listed a Bitcoin product in Brazil.
[00:06:12] And if we go back to Japan, we heard about the Bank of Japan, they have been buying equity ETFs since 2012. Currently they own 60% of the 556 billion dollars invested in ETFs in Japan. In Japan, there’s currently 20 providers. They’re listed on two exchanges.
[00:06:34] Another interesting thing about Japan, and you heard David talk about retail investors, many of the US listed ETFs are registered for sale, but not cross-listed. And these products are marketed and sold by many of the online brokers in Japan. So there’s definitely a lot going on. Japan currently accounts for 6% of global ETF assets, and I think I’ll leave it there.
[00:06:58] Thank you to our sponsor, Syntax Advisors and to David and Junichi for joining us, and of course, you for watching. For further information or prior episodes, please go to ETFTV.net. Thank you.
[00:07:18] ETF TV News does not provide investment advice nor recommend products.
Originally Posted on June 29, 2021 – David Semaya & Junichi Kamitsubo at SMTAM Discuss Listing Their First ETF in Japan
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