00:00Does this mean you're going to have some new offerings for Japanese investors?
00:06Well, thank you for the question and thank you for having me.
00:09It's great to be here in Japan.
00:13Japan is such a strategic market for us.
00:16We have been here for 25 years and we have over 100 products that are today offered to Japanese investors.
00:24And that's across ETFs, ITMs, and cross-registered funds.
00:30We have announced a partnership with SBI, as you mentioned, and we are really excited about it.
00:36We share one single goal with SBI, which is democratizing access to financial markets,
00:43giving clients exposure to low-cost segments of the market.
00:48And we are planning on launching a number of products together.
00:52We are looking at client behaviors and client trends, digital wealth and retail investors' access to financial markets is becoming
01:01a trend.
01:02So we are hoping that through this partnership with SBI, we will be able to really unleash opportunities
01:08and new potential segments of the market for Japanese investors.
01:14Can I ask you about some of the trends that you're seeing around some of these big macro themes?
01:19Because, of course, on the one hand, we have the conflict in Iran continuing to drag on, putting that upward
01:24pressure on energy prices.
01:25And then on the other, this seemingly relentless AI rally, particularly around those chip names.
01:31How are you seeing these trends reflected in ETF flows?
01:38Well, we always follow the money, because every time we follow the money, we think this is the best way
01:47to assess client interest
01:50and client behavior when it comes to these macro trends.
01:53Last year, we introduced five local ETFs to Japanese investors, and they span across gold, S&P 500, and S
02:03&P 500 high dividends.
02:04And what we have found out is that investors use gold as a way to hedge against inflation risks
02:13or against macroeconomic issues and geopolitical risks.
02:18So we have seen really healthy trends in gold with really support that is belief.
02:24And the other thing that we have seen is really good and healthy flows in equities.
02:31This year, it has been a very, very positive year for Japanese equities.
02:38Just to put it into perspective, we are just five months into 2026,
02:44and Japanese equities have registered the flows in the range of $10, $10.2 billion.
02:51This is more than the entire flows in these Japanese equities in 2024.
02:58So we do think that there is definitely a trend towards equities.
03:03There is a trend towards gold as a geopolitical hedge, but there is also another trend around income.
03:11We hear for clients that because of the trending aging issue that is affecting not only Japan, but also other
03:21markets,
03:22people are looking at very certain and more steady revenue streams.
03:27And this can be really achieved with equity products, with derivatives overlay.
03:34We have seen option-based overlay ETFs having very good and healthy trades, healthy flows from Japanese investors and outside
03:44of Japan.
03:45But we have also seen a focus on dividend-related products.
03:49We have not seen really great flows into emerging markets, emerging markets debt, or global equity.
03:58And likewise, we have not seen any healthy flows into fixed income.
04:03But we think that this is something that is really related to the geopolitical issues that we are facing,
04:08and it may change with different market cycles.
04:12And you did mention gold there, and I know you spoke to Bloomberg back in March.
04:17It was the early days of the Iran war.
04:19And at the time, you said you saw gold breaking more records this year.
04:23Well, we've seen gold come off its peak.
04:26I'm wondering if you've changed your view.
04:30Well, I have not.
04:32That's a really good question.
04:33And I think that a small, limited period in time doesn't make for an entire year or an entire market
04:41cycle.
04:42We think that the records that we have seen in the performance of gold the last year are likely going
04:50to be repeated.
04:51I don't think that gold has fixed.
04:53But just like any other asset classes, there are different cycles through which that asset classes is going through.
04:59So the current correction is, I don't look at that as a trend towards the beginning of a downside trajectory
05:07for gold.
05:08I think gold is just stabilizing.
05:15Anna, when you take a look at the seismic shifts that we see in market composition in some of the
05:21sectors,
05:21obviously AI has a big part of that, and that's been driven into the changes with the likes of Korean
05:27markets
05:28getting a bigger piece of the regional and global pie.
05:30Taiwan, for example, we've just had Korea and Taiwan topping India to become the fifth and sixth largest markets.
05:37Well, that should be reversed.
05:38Taiwan, the fifth, and Korea, the sixth largest market there, surpassing India.
05:43Does that change your business strategy in terms of how much resources, staffing, and attention
05:47you're paying to some of these rising markets?
05:53We usually, that's a really good question.
05:56Again, we usually look at everything.
05:58We are a passive, mainly a passive investment firm.
06:03So we don't look at market-specific, maybe idiosyncratic events.
06:09We look at the way by which we can provide exposure to this type of strategies or opportunities to our
06:16clients.
06:17And we usually look at our lineup and the way by which we really can have our clients participate in
06:24the growth of this ecosystem.
06:26AI, as being the big story of 2025, is going to continue to be a big story in 2026.
06:33But it's not just AI.
06:35It's the entire surround sound.
06:38It's the entire ecosystem.
06:39There will be no AI without energy.
06:42There will be no AI without a data center.
06:45So we look at that in a way that is much more holistic than a single country or single company
06:52or single exposure.
06:54And if we look at our lineup, in addition to the S&P 500, there are much more surgical ways
07:02to really benefit from the growth of a particular segment of the industry,
07:07either by sector ETFs or thematic ETFs.
07:11So we are more concentrated on index exposure than single country, single team or single companies.
07:20I think your comments about pricing and low cost being a driver are really interesting ones, right?
07:26You talk about the concern as to what happens when the market starts to crack.
07:29What do you think the risks are there?
07:34Well, the risks, there are always risks associated with investments.
07:40And we always look at the compounding effect associated with investments in financial markets.
07:48We have seen market cycles and the different market crisis, whether it is during the global financial crisis or different
07:57market bubbles.
07:58But what we have observed is that markets always come back.
08:02And we think it's really important to tell clients to remain invested because these type of market cycles are not
08:10uncommon.
08:11Market contractions can be scary. But if you look at the performance of the S&P 500, for example, since
08:18inception,
08:19if you missed five or ten of the biggest and the most successful trading days just because you pulled out
08:27of the market,
08:28you would have lost the benefits of the compounding effect of these of these financial markets returns.
08:36And, you know, you would not have helped your portfolio and your overall allocation.
08:42So we always tell clients that they need to be very clear with themselves, with their financial advisors about what
08:49goal they have to they want to achieve.
08:52And look at these investments as long term investments, access to the market with low cost products really give you
09:01access to longer term creation of wealth.
09:05So you have to look at that through these lenses more so than, you know, quick results, quick revenues, quick
09:11hits,
09:11which make you really uncomfortable if there is a market contraction.
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