We wanted to make an ESG investment that takes sustainability aspects into account in the Japanese market. This is a continuation of our ESG investments tailored to the US, European and emerging markets. Timo Sallinen, Varma's head of listed securities, said that the number of exchange-traded ESG funds in Japan is still rather low.
The fund invests in approximately 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.
In the long run, the investors selected for the fund are low emission industries whose growth prospects we believe are in the long run. The companies that operate the most responsibly were selected within each industry. One of the industries that we believe in is technology, according to Sallinen.
One of Japan s largest asset management companies, the Fund is managed by Nomura.
One of the biggest asset management firms in Japan, Nomura Asset Management, which has around EUR 467 billion in assets under management, is managed by the ETF NEXT FUNDS Solactive Japan ESG Core Index. The fund's index was custom tailored by Solactive to Varma's preferences.
The fund does not aim to track the Japanese market, as it does not cover all industries or companies in the broad indices. The tailored fund provides more of an active risk to us compared to a traditional broad market benchmark ETF, says Sallinen.