With the U.S. Federal Reserve providing a much-needed backstop in the bond market with corporate and high yield bond purchases, the Bank of Japan may follow suit. The Bank of Japan may remove a cap on government bond purchases at its next policy meeting scheduled on April 27 to help shore up the economy amid the coronavirus outbreak.
Like the U.S., the BOJ is looking to purchase more corporate debt without the caveat of having to cut rates. The current cap on bond purchases is set at around 80 trillion yen ($743 billion) a year.
With the U.S. Federal Reserve stepping in to purchase corporate bonds to help keep the economy afloat, 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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