Earlier this month, a low-emission ETF, custom-made for Finland-based pension insurance company Varma, was listed on the Tokyo Stock Exchange.

Finnish pension insurance company Varma has invested EUR 300 million in the NEXT FUNDS Solactive Japan ESG Core Index ETF that was listed on the Tokyo Stock Exchange on April 8. The ETF, custom-designed for the pension fund, is the largest ever environmentally responsible ETF to be listed in Japan. (Helsinki Times/Varma)

NEXT FUNDS Solactive Japan ESG Core Index ETF

The ETF invests in approximately 100 large and mid-sized, most liquid traded, Japanese companies selected according to strict sustainability criteria.

“The investees selected for the fund are low-emission industries whose growth prospects we believe in also in the long run. In addition, within each industry, the companies that operate the most responsibly were selected. One example of an industry whose future prospects we believe in is technology,” says Timo Sallinen, Varma’s Head of Listed Securities.

The new ETF allows Varma the twin exposures to sustainable investing as well as Japanese equities.

It will be managed by Nomura Asset Management, one of Japan’s largest asset managers with about EUR 467 billion of AUM.

It will track a sustainable index developed for Varma by index provider Solactive.

“The fund does not aim to track the broad Japanese market, as it does not nearly cover all industries or companies in the broad indices,” said Varma. “In this sense, the tailored fund provides more of an active risk to us compared to a traditional broad market benchmark ETF.”

“This is a systematic continuation of our ESG investments tailored to the US, European and emerging markets,” added Sallinen. “The number of exchange-traded ESG funds in Japan is still rather low.”

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