S&P Dow Jones Indices (S&P DJI) has launched the S&P Japan 500 GIVI Index. As the latest addition to S&P DJI's diversified Japan index fleet, it provides Japanese and international investors with an innovative, multi-factor measure that combines intrinsic value with low volatility.

The launch of the S&P Japan 500 GIVI Index also underlines the continuing popularity of the GIVI strategy in Japan, epitomized by the Government Pension Investment Fund (GPIF)'s decision to adopt the S&P GIVI Japan Index as one of the performance benchmarks in 2014.

The S&P Japan 500 GIVI Index is part of the S&P GIVI (Global Intrinsic Value Index) family. It brings together low volatility and an alternative weighting scheme that weights a stock by its calculated intrinsic value, rather than market capitalization, and seeks to provide better risk adjusted exposure to the Japan market. It is designed as a complement to the existing, more extensive S&P GIVI Japan Index and represents the market in a more targeted manner.

"Mega market trends such as a highly sophisticated investor base and an aging population are driving the gradual change of investment objectives in Japan," observes Vinit Srivastava, senior director of strategy indices at S&P Dow Jones Indices. "The design of the S&P Japan 500 GIVI Index is intended to provide for higher risk-adjusted returns in the mid- to long-term at a lower level of risk. As an investable benchmark, the new index opens the door to potential product development based upon it."

Low volatility and value are two well-documented, persistent anomalies in the equity markets. In recent years, the two factors have gained greater recognition globally as investors increasingly look for equity exposure at lower risk.

In an overhaul of their portfolio in 2014, the GPIF of Japan announced that they will include factor-based strategies in their mandates and select the S&P GIVI Japan Index as one of the performance benchmarks. This move highlights Asia's increasing awareness and acceptance of the GIVI strategy and factor-based indices in general.