“The Land of the Rising Sun” has caught value investing guru Warren Buffett’s eye. In particular, the Berkshire Hathaway CEO is placing bets on the big five Japanese trading companies, which could put Japan-focused exchange-traded funds (ETFs) on watch.
“The chairman and CEO of Berkshire Hathaway announced Sunday — his 90th birthday — that his company has acquired a slightly more than 5% stake in each of the five leading Japanese trading companies. The companies are Itochu Corp., Marubeni Corp., Mitsubishi Corp., Mitsui & Co., and Sumitomo Corp,” a CNBC article wrote. “Berkshire said it acquired the holdings over a roughly 12-month period through regular purchases on the Tokyo Stock Exchange. Based on Friday’s closing prices for the trading houses, a 5% stake in each would be valued at roughly $6.25 billion.”
Buffett, for the most part, has been quiet during the height of the pandemic sell-offs, but now as more economies look to re-open, his investing activity is starting to ramp up. Earlier, Buffett purchased a stake in Barrick Gold as prices of the precious metal have been rallying as of late amid the Covid-19 uncertainty.
Now, Buffett turns his attention to Japan.
“The Japanese trading companies — known as sogo shosha — are conglomerates that import everything from energy and metals to food and textiles into resource-scarce Japan,” the CNBC article said further. “They also provide services to manufacturers. The trading houses have helped grow the Japanese economy and contributed to the globalization of its business.”
Investors looking for Japanese equities exposure can look to ETFs like the Goldman Sachs ActiveBeta Japan Equity ETF (GSJY). 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.
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.