The Investment Trust Business in Japan Is Shifting from Distribution Stories to Market Connectivity

Low-cost ETF competition reveals a broader shift from distributor shelves to the market shelf

Competition in the US ETF market continues to intensify.

The Nasdaq-100 segment provides a recent example. BlackRock launched the iShares Nasdaq 100 ETF, or IQQ, on July 8, 2026. The ETF has a gross expense ratio of 0.12% and a net expense ratio of 0.10% under a contractual fee waiver effective through July 31, 2027. This compares with a total expense ratio of 0.18% for Invesco QQQ. State Street also entered the segment in June 2026 with the State Street SPDR Portfolio Nasdaq 100 ETF, or QNDX, which has a gross expense ratio of 0.10%. (BlackRock)

At first glance, this appears to be another round of fee competition. When multiple ETFs track the same index, lower costs clearly matter to investors.

However, the significance of this development may extend beyond a difference of a few basis points. It points to a broader change in the nature of the “shelf” on which investment products compete.

Low-Cost Competition Is Really a Battle for Shelf Space

In Japan’s traditional publicly offered investment trust business, asset managers have generally depended on banks, securities firms and other distributors to make their products available to investors.

A product first needs to be accepted onto a distributor’s product shelf. Sales representatives must understand it. Marketing and explanatory materials must be prepared. The product must then be presented to customers through the distributor’s sales channels.

Under this model, investment quality is not the only factor that determines whether a product reaches investors. It also matters whether the product is easy for sales representatives to explain, whether it fits the prevailing market environment, whether it has a compelling sales narrative and whether it is operationally convenient for the distributor.

Put more directly, the main competitive arena in the traditional investment trust business has often been the distributor’s shelf rather than investment value itself.

ETFs materially change this structure.

By listing on an exchange, an ETF is placed not primarily on a distributor’s product shelf, but on what might be called the market shelf.

Investors search for the product through brokerage trading platforms. They compare prices, trading volumes and bid-ask spreads before deciding whether to trade. The question is no longer limited to how a sales representative explains the product.

The product must be found, compared, traded and understood within the market itself.

From this perspective, an ETF is not simply an investment trust that has been listed on an exchange. It is also a mechanism that moves the main competitive arena of the investment trust business from the distributor’s shelf to the market shelf.

ETFs Do Not Return Competition to Investment Value Alone

When the shelf changes, the basis of competition—and the areas in which economic value accrues—also changes.

In a distributor-led environment, success depends partly on being selected by the distributor’s head office, understood by its sales force and presented to customers.

On the market shelf, a different set of factors becomes part of the product’s practical value. These include liquidity, bid-ask spreads, market makers, authorized participants, portfolio composition file—or PCF—disclosure, index licensing, visibility on brokerage platforms and ongoing communication with investors.

The competition among Nasdaq-100 ETFs is instructive precisely because the products provide exposure to the same index. Their strength as investment products can nevertheless differ because of fees, brand recognition, trading liquidity, the surrounding derivatives ecosystem, index licensing arrangements and investor awareness.

Nasdaq itself has stated that it is expanding access to the Nasdaq-100 through new partnerships with BlackRock and State Street while maintaining its longstanding relationship with Invesco. This illustrates how an index provider’s licensing and partnership strategy can influence competition among products tracking the same benchmark. (Nasdaq, Inc.)

Asset managers are naturally inclined to believe that assets will follow good investment management. Yet the development of the ETF market does not eliminate the business functions surrounding investment performance.

As in the traditional publicly offered investment trust market, providing investment value is necessary but not sufficient for commercial success. A product must be discoverable in the market, tradable with confidence, supported by a continuing flow of information and established as a credible option for investors.

ETFs therefore do not return the investment trust business to a world in which investment value alone determines success. For asset managers, that may be somewhat disappointing. Even in the ETF market, the quality of the portfolio is not the only factor that determines whether a product succeeds as a business.

The important difference is that the source of value outside investment management shifts.

In the traditional model, that external layer is often based on ease of distribution and the strength of the sales story. In the ETF model, it increasingly involves market connectivity, liquidity, transparency and discoverability.

This is not a minor distinction.

On the distributor’s shelf, a product reaches investors within the distributor’s sales context. On the market shelf, investors select a product through price, liquidity, information and comparability.

Both models involve functions beyond investment management. The first follows the logic of distribution. The second follows the logic of the market.

The deeper significance of ETFs may therefore lie in their ability to shift an important part of the investment trust business from distribution logic to market logic.

Who Will Build the Market Shelf?

Seen in this way, developing Japan’s ETF market requires more than increasing the number of skilled investment managers or the number of listed ETFs.

Attractive investment strategies are, of course, essential. However, a strategy alone does not ensure that an ETF will be discovered, traded or accumulated by investors.

The market-connectivity layer surrounding investment management becomes increasingly important in the ETF business.

This layer includes exchange listing, coordination with market makers and authorized participants, PCF disclosure, operational arrangements supporting liquidity provision, monitoring of trading conditions and spreads, visibility on brokerage trading platforms, recognition through information vendors and media, and communication with investors.

Some of these functions were previously embedded, at least in part, within the traditional distribution structure.

Distributors selected products. Sales representatives explained them. Marketing materials reached investors. Products were recommended within an existing customer relationship. The pathway through which an investment trust reached an investor was built into the distribution system.

For an ETF, that pathway moves to the market side.

However, listing a product does not automatically bring it to investors. The market is not a salesperson that will promote a product simply because it has been listed.

Being placed on the market shelf also means being continuously evaluated through price, liquidity, information, awareness and comparability. This is both the difficulty and the appeal of the ETF business.

Japan’s ETF market therefore needs more than additional listings. It needs a market-connectivity layer that helps strong investment strategies reach the market shelf, become discoverable and understandable, trade within an appropriate operating framework and develop into products that investors can consider holding over the long term.

If asset managers, exchanges, market makers, authorized participants, securities firms, information vendors and investor-communications functions remain disconnected, an ETF may remain little more than a listed investment trust.

Within the JAMP Corporation Group, JAMP Fund Management provides ETF White-Label Services to support this market-connectivity layer for Japan-domiciled ETFs.

Its role is not limited to creating an ETF wrapper. JAMP Fund Management supports ETF structuring, listing preparation, ongoing operations, disclosure, reporting and coordination with relevant market participants. The objective is to combine an asset manager’s investment expertise with the Japan-side product and operating foundation needed to bring a Japan-domiciled ETF to market.

This does not mean that a platform provider can guarantee investor demand, asset gathering or secondary-market liquidity. Rather, the platform helps put in place the practical foundation through which an investment strategy can be connected with the market.

ETFs do not take asset managers back to a world in which investment value alone is sufficient for business success. Economic value continues to exist outside portfolio management.

However, when that external layer moves from sales narratives to market connectivity, the investment trust business may move—at least to some extent—from the sales context of individual distributors toward the discipline of the market.

That may represent a healthier direction for the industry.

Author: Keiichi Ohara, President & CEO, JAMP Corporation
About This Article
This article is an adapted English edition of JAMP Perspective No. 341, originally written in Japanese by Keiichi Ohara and distributed on July 12, 2026. It has been edited and supplemented where necessary to make the discussion and its Japan-specific context clearer to readers outside Japan. It is therefore not a direct translation of the original Japanese newsletter.
This article is provided for informational purposes only and does not constitute investment advice or a recommendation regarding any financial product.