Two years after being plucked from the ranks of exchange product developers to design the JPX-Nikkei Index 400, Daisuke Tanaka finds himself at the centre of a corporate revolution.
Bespectacled and lean at 40, the lifelong employee of Japan Exchange Group is executing a plan backed by the government to shame corporate executives into boosting profits rather than hoarding cash.
Tanaka’s index, which aims to stoke the economy, is changing company behaviour and winning fans such as Goldman Sachs even as detractors deride its makeup and say it will cause investors to buy when valuations peak.
“I feel glad we’ve made this measure,” said Tanaka, who only started studying equity gauges four years ago. “I’ve no regrets about how we set it up.”
Tanaka is at the forefront of an experiment in corporate engineering with an index, considered by some to be a smart beta gauge that ranks companies on profit measures such as return on equity and market value. The gauge started in January and drew attention when Sony Corp was kicked out this month.
Specialised indices are gaining global traction with investors seeking to cut asset management costs. Smart beta funds accounted for about 18 per cent of United States exchange-traded assets at the end of last year, including exchange-traded notes, and grabbed 31 per cent of exchange-traded fund (ETF) net deposits in the year.