As winner of Asia Asset Management’s Best of the Best 2025 award for Best New ETF, Sumitomo Mitsui Trust Asset Management (SuMi TRUST AM) achieved a significant milestone with the launch of its first active exchange-traded fund: the SMT ETF Japan Equity Income Strategy Active (JEISA). The JEISA launch, in March 2024, coincided with the six-month anniversary of the Tokyo Stock Exchange (TSE) introducing active ETF vehicles, positioning SuMi TRUST AM as a leader in this new and dynamic market. As the first active ETF on the TSE to have a fund family structure, JEISA has achieved strong performance for investors with accumulated portfolio returns of 21.13% year-to-date.
SuMi TRUST AM explains that the fund’s investment approach is uniquely designed to seamlessly integrate both quantitative screening methods and qualitative stock selection to deliver superior results. Unlike high-dividend yield strategies that rely solely on quantitative screening, JEISA harnesses the creative expertise of Eiichi Yamada, chief fund manager, and the collective power of an in-house team of seasoned analysts to rigorously evaluate stocks for not only stable, high dividend yields, but also for their potential future shareholder returns. Thanks to this winning combination, JEISA is uniquely positioned to consistently deliver stable and superior outcomes regardless of prevailing market trends when compared to traditional high-dividend strategies which often excel in value markets while struggling in growth markets.
Fund family structure
According to Yamada, the fund family structure offers an added layer of assurance to investors as the master fund has been operational since 2007, boasting 17 years of solid performance history. For investors, having a verifiable track record is crucial as it offers confidence in the fund’s stability and robust performance. Being able to demonstrate this historical success is a significant advantage and appeals to those who wish to invest in a product with proven performance.
Resilience
JEISA’s success lies in its strategic stock selection process. Rather than merely building a portfolio of high dividend yield stocks, JEISA uses a comprehensive evaluation of dividend yield levels, stability, and growth potential. Yamada works closely with 27 local equity analysts, thoroughly evaluating each equity, visiting companies, and engaging with executives and financial officers to gain deep insights that guide the fund planning. This extensive assessment process ensures that only stocks with a proven track record of consistent dividend payouts (the ‘Core Stocks’) and those with high potential to establish a solid dividend payout policy (the ‘Satellite Stocks’) are included in the portfolio.
“Our philosophy around identifying core stocks is that they have stable revenue and consistent dividend payments,” explains Yamada. This means the focus is on selecting companies based on their ability to offer steady dividend income growth, maintain stable operations, and demonstrate exemplary dividend payout practices. By focusing on stable industries and business fundamentals, combined with consistent dividend payouts, JEISA targets solid performance for investors.
He adds that satellite stocks are those for which the team has expectations of improving shareholder returns in the future, which “we use to bolster JEISA’s performance in growth-favored markets.”
Yamada also utilises SuMi TRUST AM’s in-depth internal research resources combined with qualitative insights to select companies with potential for upward earnings revisions and earnings growth that fit the satellite stock profile. “These companies are poised to strengthen shareholder returns and exhibit excellent growth potential; they are high performers even in growth-dominated markets,” he adds.
JEISA’s dual emphasis on both stable and growing dividend payout schemes underpins its investment strategy, integrating both quantitative data and qualitative evaluations derived from direct company engagements.
As a leading asset manager in Japan, SuMi TRUST AM successfully listed three ETFs on the TSE in 2024: two Japanese equity active ETFs and a JREIT Active ETF. The firm was also recognised in AAM’s country awards for Best Equity Manager, Fund Launch of the Year, and Best REITs Manager in Japan.
“We are dedicated to providing high performing, highly competitive products for both domestic and global investors. Our ongoing commitment to innovation and excellence ensures that we continue to deliver exemplary service by consistently meeting the evolving needs of our clients, reinforcing our position as a trusted leader in the asset management industry,” concludes Yamada.
