Nomura Bets on Japan’s Hidden Opportunities With New Active Equity ETF

Why Japan? The Case for Active Management

Japanese equities have undergone significant structural changes in recent years, creating new opportunities for investors looking beyond U.S. stocks.

But Nomura's investment case goes further than Japan's broader transformation.

It rests on the belief that Japanese equities offer more opportunities for active managers to outperform than the relatively well-researched U.S. market.

Japanese equities have performed solidly in recent years, and since 2010 they have outpaced non-US markets. The gap has persisted over a long period rather than appearing in a single year. This supports the view that Japan has been a durable source of returns for global investors.

According to eVestment data compiled by Nomura Asset Management through the end of 2025, 65% of active Japan equity strategies outperformed their benchmarks since 2010, compared with 45% for U.S. equity strategies.

The difference, according to Nomura, reflects market inefficiencies stemming partly from limited analyst coverage.

When fewer analysts follow a company, pricing discrepancies may persist, giving active managers opportunities to identify stocks whose market valuations do not fully reflect their fundamentals.

Of course, historical outperformance does not guarantee future results, and the figures relate to active strategies broadly rather than NJPN's own performance.

Still, the comparison helps explain why Nomura sees Japan as a market where research-driven stock selection can make a difference.

Inside NJPN: How Nomura Picks Japanese Stocks

The process begins with fundamental and quantitative research on the largest Japanese stocks. Analyst insights from more than 3,000 annual company meetings are combined with valuation rankings against historical averages (P/E, P/B, P/CF). Together, these give each stock a final rating.

Top-down macro analysis then sets sector targets, which are merged with the stock ratings to build a portfolio of 75–100 holdings. The portfolio is measured against the MSCI Japan Index and targets 4% annual excess return over a full market cycle.

The Tokyo Advantage: Over 3,000 Company Visits a Year

What sets NJPN apart from a purely quantitative Japan equity strategy is the depth of Nomura's local research operation.

The firm's Tokyo-based investment team includes more than 20 local experts who conduct approximately 3,000 company visits annually, providing direct access to corporate management teams and firsthand insight into Japanese businesses.

Nomura Asset Management Co., Ltd. serves as the fund's sub-advisor, developing and continuously updating a recommended portfolio. The fund's manager then implements those recommendations, with limited flexibility to adjust execution and timing rather than independently select securities.

The division of responsibilities keeps the portfolio anchored to Nomura Asset Management Co., Ltd.'s investment process while allowing for practical trading considerations.

Can NJPN Help Diversify U.S.-Heavy Portfolios?

For American investors whose equity allocations are dominated by domestic stocks, NJPN offers an actively managed route into a different market.

Nomura is positioning the fund as a way to complement existing U.S. equity exposure with Japanese companies selected for their fundamentals, valuations, and growth potential.

Rather than owning Japanese stocks solely according to their benchmark weights, investors gain access to a portfolio whose sector positioning and company selection reflect Nomura's assessment of where opportunities are most attractive.

The potential appeal is twofold: geographic diversification away from U.S. equities and an active strategy designed to capitalize on opportunities that passive index funds may not distinguish between.

“Japanese equities represent a compelling diversification opportunity that many US investors have yet to fully explore,” said Anthony Caruso, Managing Director, Head of ETFs and Product Strategy. “NJPN brings together Nomura's deep local market expertise, proprietary fundamental research capabilities, and quantitative discipline to deliver institutional-quality access to this important market. We're excited to make this strategy available through the ETF structure at a competitive price point.”

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.