Finnish earnings-related pension company, Varma, has invested €300m in Japanese companies through a listed ETF fund it has developed.

The low-emission fund tailored to Varma was listed on the Tokyo Stock Exchange on 8 April 2022. It is the largest responsible investment ETF fund ever listed in Japan. Varma director for responsible listed investments, Timo Sallinen, said the provider wanted to make an ESG investment in the Japanese market that takes responsibility into account.

“This is a systematic continuation of our customised ESG investments in the US, Europe and emerging markets. There are still quite a few listed ESG funds in Japan,” he said.

The fund invests in approximately 100 large and medium-sized Japanese companies selected according to strict responsibility criteria, also taking into account the liquidity of the shares. Examples of investment targets include the pharmaceutical company Takeda, the world's leading manufacturer of heat pumps, Daikin Industries, the conglomerate Hitachi, the car manufacturer Toyota and the gaming company Nintendo.

“Low-emission industries were chosen as investment targets for the fund, and we believe in their growth prospects in the longer term. In addition, the most responsible companies within the divisions were selected. One example of an industry we believe in in the future is technology,” Sallinen said.

The ETF fund (NEXT FUNDS Solactive Japan ESG Core Index) is managed by Nomura Asset Management, one of Japan's largest asset management companies, with assets under management of approximately €467bn. The fund's index has been customised by the index house Solactive in accordance with Varma's wishes.

“The fund does not seek to monitor the broad Japanese market as it does not cover nearly all industries or companies included in the broad indices. In this sense, a tailor-made fund offers us a more active view than traditional ETFs investing in large markets,” Sallinen explained.

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