STOXX Limited, a provider of tradable and global index concepts, has licensed its iSTOXX MUTB Japan Quality 150 Index to Mitsubishi UFJ Trust and Banking Corp. (MUTB), according to a STOXX statement.
MUTB is one of Japan’s largest trust banks, and has opted to utilize the iSTOXX MUTB Japan Quality 150 Index for one of its institutional passive funds. Overall, the move represents an attempt to help reap the benefits of strong performances from companies with cash flows in Japan.
More specifically, the iSTOXX MUTB Japan Quality 150 Index is forged from the STOXX Japan 600 Index, which sees a combined ranking of four fundamentals ratios: return on equity, debt-to-capital, cash flow generation ability, and business stability. These ratios are then ranked on a selection list, while the leading 150 stocks on the selection list are eligible for inclusion in the index.
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In addition, the iSTOXX MUTB Japan Quality 150 Index is weighted by free-float market cap with a comprehensive component’s weight cap of 2%. The index is reviewed every six months, in June and December, after the review of the underlying index, and rebalanced accordingly each quarter in March, June, September and December allowing for the most transparent calibration.
According to Hartmut Graf, Chief Executive Officer, STOXX Limited, in a recent statement on the launch: “The iSTOXX MUTB Japan Quality 150 Index has been developed in collaboration with Mitsubishi UFJ Trust and Banking Corp., and offers market participants a rules-based and transparent way to participate from the Japanese government’s efforts to stimulate the economy by motivating companies to improve their return on equity. By licensing this index to MUTB for an institutional passive fund, both MUTB and STOXX are taking another step in their joint efforts to increase the foot-print of STOXX’s smart beta products in the Japanese region.”
“The iSTOXX MUTB Japan Quality 150 Index focuses on the companies’ return on equity, not only on their level of it, but also on their sustainability. This new smart beta index enables investors to invest in high quality Japanese stocks with relatively low management cost. I hope this index will attract interest in Japanese equities from both domestic and foreign investors, and am looking forward to continuing the development of new smart beta indices with STOXX, exploiting both of our expertise in active and passive investment,” added Sunao Yokokawa, Managing Executive Officer of Mitsubishi UFJ Trust and Banking Corporation in an accompanying statement.
Earlier this month, STOXX was also active on the licensing front, extending its iSTOXX Europe Demography 50 Index to Credit Suisse. The new index is able to identify what industries will be positively impacted by demographic changes.