Finvex, the Brussels based consultancy which specialises in the creation of financial investment solutions, has launched the Finvex Sustainable Efficient Japan Index. The index, which has been live since May 1, is designed to reflect the performance of a portfolio of 50 equally weighted stocks listed on various Japanese exchanges.
The company, which until now has mainly focused on Europe, wants to increase its range of indices with a number of Asian indices, according to Xavier Ducros (pictured), head of product development, Finvex. "What we are trying to do is to replicate the success we have had in Europe towards Asian markets," said Ducros.
Apart from the new Japan index Finvex is also launching the Finvex Quality Efficient Asia ex-Japan index. "When you cover Asia, it makes sense to have an Asia ex-Japan solution and cover Japan as a single country," said Ducros. "We are still very much focused on sustainability and we have seen a big growth in sustainable investments in Japan. In 2016 there was a growth of 110% compared to 2015. This is a theme which is really on the up. You see more and more reforms to improve governance for corporates. So for us it was a good reason to launch a Japanese index."
To emphasize how serious Finvex is about entering the market, the company is also working on opening an office in Japan, according to Ducros. "That is another reason why we wanted a local flavor, al local index."
The idea is to not only offer this index in Japan but also in Asia, according to Ducros. "If European investors want exposure to Japan they can use this index too of course, especially because I don't think there are many sustainable Japan index strategies out there," he said. "We follow the same methodology as we have been using for the sustainable Europe and US indices in terms of risk reduction and which have proven to work very well. We also include some quality factors on top of our sustainable filter as it remains a sustainable index.
"In the past we did some transactions with Chinese investors, but our big coverage until now has been Europe. Now we want to focus much more on Asia and make a big push in Asia with the Asia ex-Japan and with this Japanese index," said Ducros.
The fifty stocks of the Finvex Sustainable Efficient Japan Index are selected from a sustainable investment universe delivered by Sustainalytics, which is acting as the index's environmental, social and governance (ESG) research and analysis provider. "We always work on open architecture with sustainable specialists," said Ducros. "Previously we have worked with Robeco Sam, and for our ethical indices we have worked with Oekom, were you need some sector and business exclusion. We want to be open and use the company which is the best for that specific market."
The trick when creating an index for one country is that there might not be enough data to create a quality index, according to Ducros. "Sustainalytics had enough data, and enough historical data, to be able to build a proper index were you have enough stocks and enough coverage in terms of ESG scoring."
There are 165 structured products worth just under US$1bn linked to Finvex indices listed on the SRP database. "We still work closely with Societe Generale who provide access to our indices via notes or structured products," said Ducros. The vast majority of products are linked to the Finvex Sustainable & Efficient Europe 30 (FSEURE), the company's flagship index which was launched in July 2011. "It is the index we sold the most and the performance of the index is very good," said Ducros. "But of course we have other indices which are performing and selling well too. We continue to launch new indices and we are working on new ideas but always with the ESG approach."
According to SRP data, 33 products, predominately public offers in Austria and Germany, are linked to the Finvex Ethical & Efficient Europe 30 (FEEURE); 17 products are linked to the Finvex Sustainable & Efficient World 30 (RSWLDE); 13 products are linked to the Finvex Sector Efficient Europe 30 (FSECEUE); four products are linked to the Finvex Ecofi SRI Europe PR Index (EISRIEI); and one product is linked to the Finvex Sustainable & Efficient USA 30 Index (FSUSAD).
Click the link to view the index guidebook.
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