Investors throng Japan-focused ETFs

By Nishant Kumar

HONG KONG (Reuters) – Japan-focused exchange traded funds (ETFs) attracted a net inflow of $2.3 billion in March, almost entirely from investors in the United States, according to data from global fund tracker Lipper.

The strong flows follow a trend set in mid-March, when Japan-focused ETFs received a record net inflow of $1.2 billion in the week ended March 18, as investors scrambled to take advantage of a sharp fall in the country’s share market following the earthquake, tsunami and nuclear crisis.

The ETFs took in $700 million on March 16 alone, the biggest one-day inflow and twice the size of the previous record set in 2003, according to data from TrimTabs.

ETFs based in the United States received a net $2.5 billion in March, while those in Japan saw net outflows of $344 million. ETFs based in Luxembourg added $286 million, data from Lipper, a Thomson Reuters company, showed.

IShares MSCI Japan Index Fund attracted a net $1.88 billion, surging past Nomura Topix Linked Listed Investment to become the biggest Japan-dedicated ETF managing $7.4 billion at the end of March.

Assets under about 120 ETFs focused on Japan fell by $5.1 billion to $41.8 billion as the funds recorded an average 7.2 percent drop in net asset value after the massive earthquake and tsunami triggered a plunge in Japan’s benchmark Nikkei share index.

The month also saw the launch of three new Japan-focused ETFs, with two from Deutsche Bank AG after the March 11 earthquake, offering exposure to the JGB Futures Index.

(Editing by Chris Lewis and Vinu Pilakkott)

Investors throng Japan-focused ETFs