I yesterday made my first NISA investment into an ETF (SPY). I was surprised today by the NISA interface showing me a 4.5% loss despite the stock market not moving:
The strange thing is: I put 600 000 into the account. My asset balance is 564 794. My cash (for whatever reason available in 2 days) is 34 655. So where do the 26 944 loss come from? If I add up the value of the assets and the cash, (which is also available in the withdraw menu) then I arrive roughly at my initial 600 000.
hendrik wrote: ↑Tue Jan 07, 2025 2:42 am
I yesterday made my first NISA investment into an ETF (SPY). I was surprised today by the NISA interface showing me a 4.5% loss despite the stock market not moving:
The strange thing is: I put 600 000 into the account. My asset balance is 564 794. My cash (for whatever reason available in 2 days) is 34 655. So where do the 26 944 loss come from? If I add up the value of the assets and the cash, (which is also available in the withdraw menu) then I arrive roughly at my initial 600 000.
It does not appear like you purchased the US listed, USD denominated ETF SPY.
Rather some sort of mutual fund, perhaps a S&P500 fund?
Is is possible you have your terminology all twisted?
Trusts are mutual funds, and take a few days to settle. They are also denominated in Yen, so the list price fluctuates with currency and market conditions. Check back on Monday.
By the way, I find it also confusing how SBI settles stock purchases. They say it takes three days to deliver the assets to the account? I am happy that they only took one day to show up but at any European/US bank the settlement is instantaneous.
I’m guessing you bought it with a market order, so a buffer was built in, and then the actual price was secured at did not use your buffer, hence the residual. To really use the full 600,000 as much as possible you would have had to work with a limit order close to the market price to ensure it was fulfilled and even then 600,000 would likely not divide perfectly into a purchasable number of shares, so this is a downside of ETFs versus mutual funds where you can be more sure to have your money invested entirely.
The 3 day thing sounds like a settlement versus trade date issue. I thought US stocks settled on a T+2 basis these days, though.
That you can see it straight away is probably because it’s a trade date basis view, as opposed to settlement date basis, which would be relevant for tax treatment.
Edit: ChatGPT informs me that the US transitioned to T+1 settlement as of May 28 2024, so go figure.
Last edited by sutebayashi on Tue Jan 07, 2025 5:24 am, edited 1 time in total.
I see. Thank you for clarifying all of this. Indeed the transaction was projected at somewhere like 591 000. So until everything is settled, it will probably mark the additional 26 000 buffer as "lost".
Still, quite an unpleasant experience to suddenly see a 4.5% "loss" show up out of nowhere.
On the ETF vs mutual fund issue: it seems that NISA provides almost no tax benefit for ETFs as withholding tax applies (at reduced rate or full rate?) Japanese mutual funds only pay the reduced rate on US investments. The question is: how much tax do mutual funds pay in Japan? If they pay as much as in the US, then ETFs still seem like the way to go.
Another issue I have recently learned about is that ETFs and mutual funds sometimes heavily engage in asset lending. To me, that seems to be the perfect next candidate for a Lehman-event (especially given how much money has been flowing into ETFs recently). Is there any information on asset lending of for example the eMaxxis mutual funds?
adamu wrote: ↑Tue Jan 07, 2025 5:14 am
Another big one being premature ejection of tax protected cash every time a dividend is paid out.
Is this issue related to the tax free investment limits? Meaning that if the cash is ejected you need to invest it again and this reduces your tax free investment amounts? As far as I understand, there is no limit on the asset value, only on the purchasing limit.
In principle it should not matter that the cash comes out as long as it is being reinvested. But indeed, once one hits the tax free investment limit and has to reinvest dividends, the ETF dividends are becoming a problem!
adamu wrote: ↑Tue Jan 07, 2025 5:14 am
Another big one being premature ejection of tax protected cash every time a dividend is paid out.
Is this issue related to the tax free investment limits? Meaning that if the cash is ejected you need to invest it again and this reduces your tax free investment amounts? As far as I understand, there is no limit on the asset value, only on the purchasing limit.
In principle it should not matter that the cash comes out as long as it is being reinvested. But indeed, once one hits the tax free investment limit and has to reinvest dividends, the ETF dividends are becoming a problem!
Exactly
hendrik wrote: ↑Tue Jan 07, 2025 7:39 am
Is there any information on asset lending of for example the eMaxxis mutual funds?
This is a great question. It's probably in the prospectus/quarterly reports...
Unfortunately, the only relevant statement I could find in the prospectus was that the assets are managed "according to the trust agreement". I guess there is no way around looking into further documents.
Most ETFs are a bit obscure about this and the fact that they don't write it in the prospectus probably does not mean that they don't do it.
