Nomura sets up ETF team, sees growth in Japan

Nomura Holdings plans to add more foreign and domestic exchange traded funds (ETF) to its line-up in Japan, eyeing growth in a market it hopes will double in three years, an executive at Japan's largest brokerage said.
Nomura has recently established a team dedicated to marketing ETFs, aiming to attract a wider range of retail and institutional investors and stoke growth in Japan's ETF market, which has shrunk 12 percent since peaking at around $35 billion in 2006.
"The number of ETFs listed on Japanese exchanges has increased over the last three years, but we think things shouldn't end there. We need to make a better effort to attract more investors," Makoto Shiota, head of the ETF market group at Nomura Securities, told Reuters in an interview.
Shiota manages a team of six, including two former executives of the Japanese unit of BlackRock Inc, the world's top ETF provider. The global ETF market size has expanded by more than 10 times to $1.24 trillion in total assets in October, from $104.8 billion nine years ago, according to data by BlackRock.
The Japanese ETF industry has also expanded rapidly over the past decade. Assets totalled $30.5 billion in October, up from $6.6 billion in 2001, though down from a peak of $34.6 billion in 2006, BlackRock data showed.
ETFs are popular among passive investors as it is a cost-effective way to get exposure to benchmark indicies, such as Japan's Nikkei stock average and Brazil's Bovespa index, as well as commodities like gold and oil.
Nomura hopes to gain more attention from traditional retail investors and institutions by offering a variety of ETFs. Nomura plans to increase the distribution of foreign ETFs to 60 by the end of March from 42 now, focusing mainly on foreign bond funds, Shiota said.
ETFs linked to Japanese government bonds could also draw interest from foreign investors, Shiota said, adding that it would be suitable for the broker's asset management arm, Nomura Asset Management, to launch one over the long-term.
Nomura believes the Japanese ETF market could double to 5 trillion yen in three years from the current 2.5 trillion yen, helped by news that Japan Post Bank (Yucho), the world's biggest bank, and Japan's central bank were investing in ETFs.
"The BOJ will use ETFs in their money market operations and Yucho will also treat ETFs as an investment tool. These moves are extremely important," Shiota said.
Japan Post Bank was reported to have invested about 50 billion yen in ETFs of emerging market equities, while the BOJ set up a 5 trillion yen asset buying scheme in November that included the purchase of ETFs.