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Blog Posts — November 26, 2020

Three Japan-Focused Notes Tracking STOXX Indices Listed by Mitsubishi Securities

Qontigo and Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (MUMSS) have joined forces with the listing of three exchange-traded notes (ETNs) in Japan, as demand for innovative index-based products grows in the Asian country. 

The notes track respectively the iSTOXX® MUTB Japan Empowering Women 30 IndexiSTOXX® MUTB Japan ESG 30 Index and iSTOXX® MUTB Japan Market Share Leaders Index and were listed on the Tokyo Stock Exchange on Nov. 26. The underlying indices show a varied range of strategies and investment approaches that were devised to meet specific client demand.

“These three indices reflect attractive themes and include a strong environmental, social and governance (ESG) tilt, addressing key current demands from investors in Japan and beyond,” said Rick Chau, head of Asia/Pacific at Qontigo, STOXX’s parent company. The notes are the first-ever to be listed by MUMSS.

Thematic, ESG, leadership

The iSTOXX MUTB Japan Empowering Women 30 Index tracks the performance of 30 companies within the iSTOXX® MUTB Japan Quality 150 Index that support and encourage working women.

The iSTOXX MUTB Japan ESG 30 Index selects 30 securities with the best ESG Risk Rating scores from within the iSTOXX MUTB Japan Quality 150 Index. Companies that are non-compliant with the Global Standards Screening (GSS) or are involved in Controversial Weapons activities, as identified by Sustainalytics, are not eligible for selection.

Finally, the iSTOXX MUTB Japan Market Share Leaders Index tracks the performance of at least 30 Japanese securities that have prominent positions in their area of operations. The securities are selected from the STOXX® Japan 600 Index, excluding real estate investment trusts.

Record flows

Assets and inflows into Japan-listed exchange-traded funds and products have reached records this year, even as the domestic economy is set to contract. The Bank of Japan has increased the purchase of equities in 2020 and kept interest rates at negative levels to stimulate consumption.

Founded in 2010 as a joint venture between Mitsubishi UFJ Financial Group (MUFG) and Morgan Stanley, MUMSS offers investment-banking and securities services. MUFG is a leading global financial services group and one of the largest banking institutions in Japan.

The collaboration between STOXX and MUFG dates back to the launch in 2015 of a family of smart beta indices that includes the iSTOXX MUTB Japan Quality 150 Index and iSTOXX® MUTB Global Quality 150 Index. The indices aim to capture the performance of companies with high return on equity (ROE), low leverage and sustainable cash flows. In the past five years, the iSTOXX MUTB Japan Quality 150 index has returned three times the performance of the benchmark STOXX Japan 600 Index.