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The NI225 index is one of the key indicators for the Japanese economy. Also known as the Nikkei and the Nikkei Stock Average, the NI225 tracks the stocks of 225 large publicly owned companies listed on the Tokyo Stock Exchange.
This page will take you through a brief history of the NI225 index, provide information as to how the stocks it tracks are selected, and give you all the details you need in order to invest in the index.
The NI225 is a price-weighted index that began being calculated on 7th September 1950. It is calculated by the Nihon Keizai Shinbun newspaper, and after technological innovations in 2010, the index is now calculated every 15 seconds when markets are open.
All of the 225 stocks tracked by the NI225 are listed on the Tokyo Stock Exchange, and represent companies from every sector of the Japanese economy – including pharmaceuticals, banking, and transport. The largest company currently tracked by the Nikkei index is the retail holding company Fast Retailing.
The history of the NI225 is a bit different to other major global stock indices. While considerable rises and falls were seen during both the dotcom bubble and crash of the late 1990s/early 2000s and the financial crash of 2007-08, the NI225’s peak was reached many decades before. The Japanese asset price bubble of the late 1980s saw the NI225 reach its all-time-high of 38,915.87 on 29th December 1989. The index saw a downward trend from this point and fell all the way to 7,054.98 on 10th March 2009. The index has rallied in recent years, but has never again got near the highs it saw in the 1980s.
The NI225 tracks the stocks of 225 publicly traded companies listed on the Tokyo Stock Exchange. It is a price-weighted index, and the companies included in the index are assessed annually by the Nihon Keizai Shinbun which calculates the Nikkei index.
While you can’t invest directly in a stock index, you can put money into investment products which track its performance. If you want to invest in the NI225, your best options are with an ETF or a mutual fund. ETF stands for ‘exchange-traded fund,’ and these products follow the performance of all the stocks in a specified index, but can also be bought or sold at any time during regular trading hours on an exchange. An NI225 mutual fund is a fund that pools money from a variety of investors, with that capital then being invested by a fund manager in order to track the performance of the NI225. These tend to come with higher fees than ETFs and can only be bought or sold at the end of each trading day.
In general, ETFs are a better option if you want the flexibility of being able to trade your investment at any time, and mutual funds make more sense if you’re planning on buying and holding an investment in the NI225 for a longer period of time.