Bank of Japan Plans to Buy $2.5 Billion of Nonexistent ETF’s

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The Bank of Japan announced on Friday that it will be purchasing $2.5 billion of ETF’s. These measures are an attempt to offset the impact of the country selling stocks purchased earlier in the year from financial institutions.

The bank announced these measures, but the main issue is that these ETF’s do not exist as of yet in Japan.

Nikko Asset Management Co., a company which oversees $25 billion of ETF’s, stated that these kinds of ETF’s don’t currently exist. A spokesperson for the company further said that the Bank of Japan is using unusual methods to choose ETF’s for investment.

The asset management company believes that the Bank of Japan is waiting for companies to make these ETF’s for investment purposes. While the government is aware that these products do not currently exist, the bank will continue to invest in ETF’s that are currently tracking on the JPX-Nikkei Index 400.

The bank wants to invest in exchange traded funds that track companies that are making investments in physical and human capital. The 300 billion yen would be a welcomed addition to the market, but these types of ETF’s are currently in their infancy and are high-capex indexes. Japan Exchange Group also confirmed that these types of investment products are not available, and did not comment on whether they have plans to introduce these ETF’s in the future.

Japan’s stock market suffered, down 1.9% on Friday following news.

Jacob Maslow is a native New Yorker with  five children. He left his payroll manager position after finding that his true passion was in writing, and has never looked back.

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