Nomura Asset Management Co., Ltd. (NAM) is a distinguished global leader in asset management, known for its innovative approach to investment solutions. Among its most recognized offerings is the NEXT FUNDS series, a robust lineup of exchange-traded funds (ETFs) that caters to a wide range of investment strategies. These funds have become a cornerstone for investors seeking diverse exposure to both Japanese and global markets. This article delves into the history, structure, and benefits of the NEXT FUNDS series, providing a detailed understanding of their role in modern portfolio management.

The Origin of NEXT FUNDS

The NEXT FUNDS series traces its origins to 1995, with the launch of Japan’s first ETF—the Nikkei 300 Index Exchange Traded Fund. This groundbreaking initiative paved the way for the development of a comprehensive suite of ETFs designed to meet the evolving needs of investors. Over the years, Nomura Asset Management has continuously expanded the scope and sophistication of its offerings, solidifying its reputation as a pioneer in the industry.

Diverse Product Range

NEXT FUNDS offers a diverse selection of ETFs, enabling investors to target various asset classes, including equities, fixed income, real estate investment trusts (REITs), and commodities. For example, the NEXT FUNDS Nikkei 225 Exchange Traded Fund (Ticker: 1321) provides exposure to the Nikkei 225 Index, one of Japan’s most prominent stock indices. Similarly, the series includes ETFs tracking the TOPIX Index, thematic funds focusing on emerging sectors like clean energy, and international ETFs offering exposure to markets beyond Japan.

Introduction of Actively Managed ETFs

In recent years, Nomura Asset Management has ventured into the realm of actively managed ETFs within the NEXT FUNDS series. In August 2023, it launched Japan’s first actively managed ETFs, including the NEXT FUNDS Japan Growth Equity Active Exchange Traded Fund and the NEXT FUNDS Japan High Dividend Equity Active Exchange Traded Fund. These funds leverage NAM’s proprietary research and expertise, allowing investors to access carefully curated portfolios that align with specific investment objectives, such as growth and income generation.

Global Expansion

The appeal of NEXT FUNDS extends beyond Japan. Nomura Asset Management has actively pursued global expansion, collaborating with international partners to make its products accessible to investors worldwide. A notable example is its partnership with Lion Global Investors to launch the Lion-Nomura Japan High Conviction Fund, an actively managed ETF powered by artificial intelligence. This fund, introduced in Southeast Asia, demonstrates NAM’s commitment to innovation and its ability to adapt to the global investment landscape.

Why Choose NEXT FUNDS?

Investors are drawn to NEXT FUNDS for several reasons, including their transparency, liquidity, and cost-effectiveness. The funds are designed to track specific indices or follow targeted strategies, providing clear insights into performance. Moreover, their listing on the Tokyo Stock Exchange ensures high liquidity, allowing investors to enter and exit positions with ease. The relatively low expense ratios of these ETFs make them an attractive option for cost-conscious investors.

Risk Considerations

While NEXT FUNDS offer numerous advantages, potential investors should be aware of associated risks. Many of these ETFs are denominated in Japanese yen, which introduces currency risk for international investors. Additionally, the performance of the funds is directly tied to the underlying indices or strategies, which can be influenced by market volatility, economic conditions, and sector-specific trends. Understanding these risks is crucial for making informed investment decisions.

Sustainability and ESG Focus

Nomura Asset Management has increasingly integrated environmental, social, and governance (ESG) principles into its product lineup, including NEXT FUNDS. This reflects a growing demand among investors for sustainable investment options that align with their ethical values. NAM’s ESG-focused ETFs are designed to target companies demonstrating strong sustainability practices, making them an appealing choice for socially conscious investors.

How to Invest in NEXT FUNDS

Investing in NEXT FUNDS requires opening an account with a financial instruments business provider or securities firm that handles these ETFs. Nomura Asset Management does not directly process orders from individual investors. Once an account is established, investors can trade NEXT FUNDS just as they would with individual stocks, benefiting from the flexibility and convenience of ETFs.

Fees and Cost Efficiency

Nomura Asset Management has prioritized transparency in its fee structure, ensuring that investors understand the costs associated with each fund. Management fees vary depending on the specific ETF, but they are generally competitive compared to other funds in the market. This commitment to cost efficiency enhances the overall value proposition of the NEXT FUNDS series.

The Role of Technology and Innovation

Technology plays a pivotal role in the continued success of NEXT FUNDS. From the integration of artificial intelligence in actively managed ETFs to the use of advanced analytics for portfolio construction, Nomura Asset Management leverages cutting-edge tools to deliver superior investment solutions. These innovations enable the firm to stay ahead of industry trends and meet the evolving needs of investors.

Conclusion

The NEXT FUNDS series represents a dynamic and versatile investment option for those seeking exposure to Japanese and global markets. With its broad range of products, commitment to innovation, and focus on sustainability, Nomura Asset Management continues to set a high standard in the ETF landscape. Whether you are a seasoned investor or a newcomer to the world of ETFs, NEXT FUNDS offers a compelling avenue for achieving your financial goals.

Frequently Asked Questions (FAQs)

1. What are NEXT FUNDS?
NEXT FUNDS is a series of exchange-traded funds (ETFs) offered by Nomura Asset Management, providing exposure to various asset classes and markets.

2. Are NEXT FUNDS actively managed?
Some funds in the NEXT FUNDS series are actively managed, such as the NEXT FUNDS Japan Growth Equity Active ETF, launched in 2023.

3. Where can I invest in NEXT FUNDS?
NEXT FUNDS are primarily listed on the Tokyo Stock Exchange and can be accessed through securities firms handling ETFs.

4. What are the benefits of investing in NEXT FUNDS?
The benefits include transparency, liquidity, cost efficiency, and access to diverse markets and strategies.

5. Are NEXT FUNDS suitable for international investors?
Yes, but international investors should consider currency risk and other market-specific factors when investing.

6. How does Nomura Asset Management integrate ESG into NEXT FUNDS?
NAM offers ESG-focused ETFs within the NEXT FUNDS series, targeting companies with strong sustainability practices.