We wanted to make an ESG investment that takes sustainability aspects into account in the Japanese market. This is a systematic continuation of our investments in the ESG sector that are tailored to the US, European and emerging markets. Timo Sallinen, Varma's Head of Listed Securities, says that the number of exchange-traded ESG funds in Japan is not very high.
The fund invests in around 100 large and mid-sized Japanese companies selected according to strict sustainability criteria, with the liquidity of the shares also taken into account. Among the investors are the pharmaceutical company Takeda, the world's leading manufacturer of heat pumps, Daikin Industries, the conglomerate Hitachi, Toyota and the video game company Nintendo.
The investors selected for the fund are low emission industries whose growth prospects we believe in the long run. The companies that operate the most responsibly were selected within each industry. Sallinen said that the industry whose future prospects we believe in is technology.
One of the biggest asset management companies in Japan, Nomura, managed the fund by Nomura.
One of the largest asset management firms in Japan, Nomura Asset Management, has about EUR 467 billion in assets under management, according to the ETF NEXT FUNDS Solactive Japan ESG Core Index. The fund's index has been tailored to Varma's preferences by the index provider Solactive.
The fund does not aim to track the broad Japanese market, as it does not cover all industries or companies in the broad indices. The tailored fund provides more active risk to us than a traditional broad market benchmark ETF, says Sallinen.