Indxx, an index provider headquartered in New York, has launched the Indxx Dominant Dividend Japan Index. The smart beta index gives exposure to 50 high dividend paying stocks domiciled in Japan. Indxx has indicated the index is suitable for use as the underlying for ETF creation.
Over the past five years, the index has delivered a higher return and lower volatility than the Topix, Nikkei 225 and MSCI Japan indices.
Indxx states that the index is “a diversified, 50 stock equal-weighted index that is designed to measure the performance of companies in Japan that have a consistently high dividend yield and low beta relative to the broad Japanese equity markets.”
Historical dividend yields for the Dominant Dividend Japan index are 3-4% compared to 1-2% for broad market cap-weighted Japanese equity benchmarks. In the five years to 30 June 2017, the index returned 12.7% per year compared to 10.5% for the Topix, 11.6% for the Nikkei 225 and 9.9% for the MSCI Japan. Over the same period, the annualized volatility of the Dominant Dividend Japan Index was 14.8% compared to 18.0% for the Topix, 19.1% for the Nikkei 225 and 19.0% for the MSCI Japan.
Major sector weights in the index include consumer discretionary (26%), real estate (17%), information technology (14%) and industrials (12%). The largest individual holdings are Showa Denko (4.5%), Noevir Holdings (3.1%), Paltac (3.0%) and ITOCHU Techo-solutions (3.0%).
Indxx was launched in 2005 and provides index development and calculation, analytics and research from offices in New York, New Delhi and Prague. The firm provides benchmark indices for a number of ETFs, including the Global X Internet of Things Thematic ETF (Nasdaq: SNSR) and the USCF Restaurant Leaders Fund (NYSE Arca: MENU) from issuer US Commodity Funds.
The largest ETF to track an Indxx index is the Global X Super Dividend US ETF (NYSE Arca: DIV), launched in March 2013, which has $410 million in assets with a total expense ratio (TER) of 0.45%.
Investors looking for high dividend Japanese equity exposure through an ETF could try the WisdomTree Japan SmallCap Dividend Fund (NYSE Arca: DJF), launched in June 2006, which has $518m in assets and a TER of 0.58%.