Providers of exchange traded funds, or ETFs, are wooing Japanese retail investors with opportunities to invest in foreign stocks amid expectations the market will soon see a flood of fresh funds.
"Here in Japan, it is very clear the non-domestic equity share of investments in this market is significantly lower compared to Europe or to the U.S., so there is much more need for diversification in general," said Harmut Graff, CEO of index provider Stoxx.
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This week, his company launched the Stoxx Asean-five Select Dividend 50 index ETF on the Tokyo Stock Exchange, in partnership with Nomura.
Graff expects a lot more demand for these sorts of products following the launch of the Nippon Individual Savings Account, or NISA, program at the beginning of the year. The accounts offer a five-year tax holiday on dividends and capital gains, provided the funds are invested in stocks, mutual funds or exchange-traded funds, with bonds not eligible for the tax breaks.