As expected since the U.S. Federal Reserve decided to pour more funds into its quantitative easing program, the Bank of Japan followed suit with a plan to purchase corporate bonds to help shore up its economy.
The BOJ is looking to triple its maximum holdings of corporate debt to ¥20 trillion ($186 billion), which comes after gloomy forecasts that its economy would shrink between 3% and 5% by March 2021. With the coronavirus pandemic putting a lot of companies in a world of hurt, central banks around the globe are stepping in to help curb its effects by purchasing corporate debt.
“It is an extraordinary economic crisis that has caused restraints on both supply and demand,” said BOJ Gov. Haruhiko Kuroda.
With central banks around the globe looking to stabilize the corporate bond markets, one ETF to consider is the Goldman Sachs Access Investment Grade Corporate Bond ETF (GIGB). GIGB seeks to provide investment results that closely correspond to the performance of the FTSE Goldman Sachs Investment Grade Corporate Bond Index.
The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index. The index is a rules-based index that is designed to measure the performance of investment grade, corporate bonds denominated in U.S. dollars that meet certain liquidity and fundamental screening criteria.
A few single country Japanese funds to consider:
- JPMorgan BetaBuilders Japan ETF (BBJP): seeks investment results that closely correspond to the performance of the Morningstar® Japan Target Market Exposure IndexSM. The underlying index is a free float-adjusted market capitalization weighted index which consists of stocks traded primarily on the Tokyo Stock Exchange or the Nagoya Stock Exchange. The fund may invest up to 20% of its assets in exchange-traded futures and forward foreign currency contracts to seek performance that corresponds to the underlying index.
- Franklin FTSE Japan ETF (FLJP): seeks to provide investment results that closely correspond, to the performance of the FTSE Japan RIC Capped Index. The FTSE Japan Capped Index is based on the FTSE Japan Index and is designed to measure the performance of Japanese large- and mid-capitalization stocks.
- Goldman Sachs ActiveBeta Japan Equity ETF (GSJY): seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs ActiveBeta® Japan Equity Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets (exclusive of collateral held from securities lending) in securities included in its underlying index, in depositary receipts representing securities included in its underlying index and in underlying stocks in respect of depositary receipts included in its underlying index. The index is designed to deliver exposure to equity securities of Japanese issuers.
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