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Bank of Japan now holds about 70% of country's ETF market
A follow-up from my post about 1 year ago and BOJ's buying of the country's etf's and the ultimate "plunge protection program" from a powerful central bank of the world's third largest economy. I recall that a special etf class was "built" for similar purchases.
That means they're paying something in the neighborhood of $54 MM annually in the expense ratio. Don't you think they could just do the trades for the individual companies themselves and come out way ahead? Why should taxpayers accept that?
Hi @LLJB Here is a list of articles regarding the BOJ and their brief history of supporting their equity markets. I did not dig through the articles to discover whether the bank pays any fees for purchases; but $54MM/annual would likely be little to the overall program.
Hi @catch22 and thanks!! My $54MM was calculated in a ridiculous way that I didn't think much about at the time. As of a few months ago the BOJ owned roughly $144BN of equity securities. My $54MM would be less than 4 basis points as an expense ratio and you're right it's not a big number in terms of what they hold but its still a lot of money.
One interesting thing I read is that the BOJ's balance sheet is the same size as the Fed, but their GDP and population are about 30% of the US. They also didn't start this process until years after the Fed did and they're still going strong. So far I haven't read anything suggesting they're ready to stop printing money. I think we have to be a little worried about what might happen when the Fed starts reducing their balance sheet but I don't think I want to be anywhere near an investment in Japan when the rumors start. I've owned MAPIX for a pretty long time and been very happy with it but with 30% of the portfolio in Japan I might need to make it a smaller part of my portfolio.
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Here is a list of articles regarding the BOJ and their brief history of supporting their equity markets. I did not dig through the articles to discover whether the bank pays any fees for purchases; but $54MM/annual would likely be little to the overall program.
https://www.google.com/search?q=special+etf+for+bank+of+japan+purchases&oq=special+etf+for+bank+of+japan+purchases&aqs=chrome..69i57.29485j0j8&sourceid=chrome&ie=UTF-8
One interesting thing I read is that the BOJ's balance sheet is the same size as the Fed, but their GDP and population are about 30% of the US. They also didn't start this process until years after the Fed did and they're still going strong. So far I haven't read anything suggesting they're ready to stop printing money. I think we have to be a little worried about what might happen when the Fed starts reducing their balance sheet but I don't think I want to be anywhere near an investment in Japan when the rumors start. I've owned MAPIX for a pretty long time and been very happy with it but with 30% of the portfolio in Japan I might need to make it a smaller part of my portfolio.