Invest in Nikkei 225
Broaden your global exposure by investing in the Nikkei index.
Investors can broaden their portfolios by investing in the Nikkei — an index that tracks 225 big-name stocks traded on the Tokyo Stock Exchange.
What's in this guide?
What is the Nikkei 225 index?
The Nikkei 225 index — also called the Nikkei Stock Average or simply, the Nikkei — is one of Japan’s leading stock indices. It’s a price-weighted index that tracks 225 blue-chip stocks traded on the Tokyo Stock Exchange across 36 industries.
The index has been calculated since 1950 and is named after the Japan Economic Newspaper, Nihon Keizai Shimbun. It is Asia’s oldest index and is often regarded as the Japanese equivalent to the Dow Jones Industrial Average.
How to invest in the Nikkei 225 index
There are three ways to invest in the Nikkei 225. You can purchase individual stocks within the index, you can purchase an ETF that tracks the index as a whole, or you can trade CFDs with the ETF as the underlying asset.
Here’s a quick breakdown of the process:
- Select an investment platform. If you don’t already hold a trading account, compare trading platforms to find the platform that best meets your needs.
- Open and fund your account. You can typically complete an application online, and fund your account before you start trading.
- Purchase your securities. Use your platform’s research tools or rely on third-party market research to select the stocks or ETFs you’d like to purchase.
- Monitor your investments. Track the performance of your investments from your trading account.
What stocks are in the Nikkei 225 index?
The Nikkei tracks stocks available for trade on the Tokyo Stock Exchange. To buy or sell these stocks, sign up for an international trading account with a broker that offers access to global exchanges.
Among the most popular of the Nikkei’s 225 stocks are:
- Canon Inc.
- Daikin
- Denso
- FANUC
- Fast Retailing
- Honda Motor Company
- Isuzu Motors
- KDDI
- Mitsubishi UFJ Financial
- Nippon Telegraph and Telephone
- Nissan Motor Company
- NTT Docomo
- Panasonic
- Softbank
- Sony Corporation
- Toyota Motor
How is the Nikkei 225 performing?
The graph below tracks how the Nikkei 225 has performed over the past year.
Why should I invest in the Nikkei 225 index?
One of the biggest draws to investing in index funds like the Nikkei 225 is the opportunity for portfolio diversification. Plus, if you’re seeking Japanese stock market exposure, an ETF offers a conveniently packaged investment opportunity.
While you can invest in individual stocks, ETFs are less volatile and offer more asset diversification. Especially since the Nikkei tracks 225 blue-chip stocks across 36 industries.
What are the risks of investing in the Nikkei 225 index?
As is the case for any investment, no stock or ETF is risk-free. If the index performs well, you’ll make a profit. If the index drops, so will your investments.
The Nikkei is one of Japan’s oldest and best-established indices but isn’t immune to volatility. For example, the Nikkei fell more than 10% after a record-breaking 9.1 magnitude earthquake shook the country in March 2011. The index has since recovered but the event demonstrates that even well-established indices can be impacted by political and environmental factors.
Bottom line
The Nikkei tracks 225 of the largest and most profitable companies in Japan. While you can’t invest in the index directly, you can invest in ETFs that track the index, CFDs with those ETFs as the underlying asset, or trade stocks included in the index.
Review your trading account options across numerous trading platforms to find the broker that best fits your investment goals.
Invest in ETFs via a CFD platform
Frequently asked questions
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs comes with a higher risk of losing money rapidly due to leverage. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
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