Japan, the third-largest economy, has managed to prevent a marked spike in the number of coronavirus cases compared to the top two economies—the United States and China. As such, a scant 2.6% unemployment rate puts exchange-traded funds (ETFs) in the spotlight that feature Japan, such as the Goldman Sachs ActiveBeta Japan Equity ETF (GSJY).
“During good times, companies accumulate profits on their balance sheets by restricting rises in worker’s salaries,” said Naohiko Baba, chief Japan economist at Goldman Sachs, in a New York Times report. “During bad times, companies refrain from firing redundant workers by using retained earnings accumulated during good times, so that people can have secure jobs.”
GSJY seeks to provide investment results that closely correspond 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, which is designed to deliver exposure to equity securities of Japanese issuers.
Holdings in GSJY feature a broad range of sectors, including heavy tilts to consumer discretionary names, technology, and industrials. Here’s the breakdown by sector:
- Consumer discretionary: 17.4%
- Industrials: 17.1%
- Technology: 13.3%
- Healthcare: 11.7%
- Consumer staples: 11.2%
- Communications: 10%
- Financials: 8.4%
- Materials: 3.6%
- Real Estate: 2.5%
- Utilities: 1.6%
- Energy: 1.5%
- Cash: 1.8%
As far as specific names go, it features a couple of familiar Japanese mainstays like Toyota Motor Corporation and Sony Corporation. Here are the top 10 holdings as of June 18:
- Toyota: 3.2%
- Sony: 2.4%
- SoftBank Group Corp: 1.8%
- Keyence Corp: 1.7%
- Honda Motor Co Ltd: 1.5%
- Takeda Pharmaceutical Co Ltd: 1.4%
- KDDI Corp: 1.4%
- Nintendo Co Ltd: 1.3%
- Daiichi Sankyo Co Ltd: 1.3%
- Nippon Telegraph & Telephone Corp: 1.2%
High on Due Diligence, Low on Cost
Because GSJY is an ActiveBeta® ETF, that means it follows a performance-seeking methodology that aims to select stocks based on well-established attributes of performance while remaining benchmark-aware. As such, factor diversification is achieved with four distinct performance attributes: good value, strong momentum, high quality, and low volatility.
Furthermore, ActiveBeta® ETFs are among the most competitively priced ETFs on the market. For example, the cost of Goldman Sachs’ ActiveBeta® Japan Equity ETF is 25 basis points, compared to the industry average for smart beta ETFs of 48 basis points.
For more information on GSJY, click here.
Additionally, for more market trends, visit ETF Trends.