Lyxor switches Japanese ETF to physical replication

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Lyxor has switched their Japanese Topix ETF (JPN) to physical replication in their latest step towards 50% physical ETF assets.

Following the switch, Lyxor has over 46% of their assets in physical ETFs (€20.6bn), placing them amongst Europe’s largest physical ETF providers, the company said.

The Lyxor Ucits ETF Japan was the company’s first Asian Equity ETF when it launched in 2005.

With over €1bn in assets under management it is the largest ETF in Europe for the Topix Index and one of Lyxor’s ‘Essential’ core benchmark exposures.

Converting it to physical replication brings it in line with their more recent Lyxor JPX-Nikkei 400 Ucits ETF, which is also physical.

Lyxor began using physical replication in 2012, but today with 37 physical ETFs, it is the company’s principal form of replication for simple developed market exposures.

Synthetic replication is maintained for harder to reach exposures such as emerging markets where it can be more efficient.

The switch of JPN follows Lyxor’s MSCI EMU ETF earlier this year and Euro Stoxx 50 ETF at the end of 2015.

Commenting on the switch, Arnaud Llinas (pictured), head of ETFs and Indexing says: “We are one step closer to delivering a true ‘best of both worlds’ approach to replication.

“This is essential in our ambition to maintain the highest levels of tracking precision and trading efficiency across the whole range.”