Comparing 10 Japanese High-Dividend ETFs and Mutual Funds for NISA: How Your Choice Changes Based on Whether You 'Receive' or 'Reinvest' Dividends

Introduction

I am considering buying Japanese high-dividend ETFs or mutual funds in next year’s NISA growth investment quota.

However, once I started researching, similar-sounding products kept appearing one after another. Even just for products linked to the same ‘Nikkei 225 High Dividend Yield 50’ index, there are multiple ETFs and mutual funds. On top of that, there are types where the management company selects the stocks without using an index, and even new types of ETFs with mechanisms like the ‘435A’ I initially had in mind as a candidate.

I greedily set the following three criteria for selection:

To state the conclusion first, there was no single product that satisfied all three of these as the best. Furthermore, I found that the rankings themselves flip depending on whether you ‘receive and spend’ the dividends or ‘reinvest and grow’ them.

In this article, I will take up 10 products confirmed to be eligible for purchase within the NISA growth investment quota, arrange the data based on the three conditions, and organize the two types of rankings. The figures were confirmed as of October 13, 2026, but the reference dates differ for each product. Please view them strictly as a guide for comparison.

Why you cannot choose based solely on the ‘dividend yield’ of high-dividend ETFs and mutual funds

When looking for high-dividend products, it is natural to focus on those with the highest dividend yields. However, there is something you should keep in mind first.

Dividends are not money you gain just by receiving them.

When a mutual fund or ETF pays out a dividend, the assets within the fund decrease by that amount, and the net asset value (price per unit) drops. For example, if a fund with a net asset value of 10,000 yen pays out 300 yen, the net asset value will become 9,700 yen, assuming other conditions remain the same. Combined with the 300 yen in your hand, it remains 10,000 yen.

Figure 1: The mechanism by which net asset value drops when dividends are paid

In other words, what you should look at is not just the dividend, but the **’total return’ which combines dividends and price movement**.

Let’s look at the actual numbers. According to a comparison article on Japanese high-dividend ETFs published in July 2026, the dividend yield of the ‘Global X MSCI SuperDividend Japan ETF (2564),’ known for its high yield, was 4.28%. This was among the highest of the 15 products compared. On the other hand, its return for the most recent year was +22.6%, which was the lowest among the 15.

Looking at the ‘NF Nikkei High Dividend 50 (1489)’ in the same article, the dividend yield is only 2.85%, but the return for the most recent year is +47.5%.

It is not the case that products with higher yields necessarily grow your assets more.

The same can be said for mutual funds. The ‘Japanese Stock Dividend Open (Nickname: Shiki no Minori),’ which catches the eye with the size of its dividends, has a trust fee of 1.1% per year. Since the low-cost mutual funds I will introduce later are around 0.1%, there is about a 10-fold difference. You need to look not only at the amount of the dividend but also at the costs you are paying for it.

The three conditions used for comparison and the 10 candidates

Based on the above, I have decided on the following criteria.

• Criterion 1: Price Appreciation: Look at returns including dividends

• Criterion 2: Dividends: Look at the dividend yield for the most recent year

• Criterion 3: Expenses: Look at the trust fee (including tax)

The candidates are the following 10 funds that invest in high-dividend Japanese stocks. All of these have been confirmed through information from asset management companies or securities firms to be eligible for the NISA Growth Investment Quota (they cannot be purchased in the Tsumitate Investment Quota).

Mutual Funds (3 funds)

• Tracers Nikkei 225 High Dividend Yield 50 Index (Odd-Month Distribution Type)

• SBI Japan High Dividend Equity (Distribution) Fund (Quarterly Settlement Type)

• SBI Japan High Dividend Equity Fund (Annual Settlement Type)

ETFs (7 funds)

• Listed Index Fund Nikkei 225 High Dividend Yield 50 (399A)

• NEXT FUNDS Nikkei 225 High Dividend Yield 50 Index (1489)

• iFreeETF TOPIX High Dividend 40 Index (1651)

• NEXT FUNDS Nomura Japan Equity High Dividend 70 (1577)

• Listed Index Fund Japan High Dividend (1698)

• NEXT FUNDS Japan High Dividend Equity Active (2084)

• iFreeETF Japan Equity Dividend Rotation Strategy (435A)

When ranking these 10 funds based on the three criteria, the top-performing products had clear commonalities. However, those commonalities also come with weaknesses. From here on, I will summarize the data list for the 10 funds, their rankings for both ‘receiving’ and ‘reinvesting’ scenarios, the weaknesses common to the top products, three questions to help you apply this to yourself, and a checklist to follow before buying.

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Data for the 10 funds ranked by the three criteria

First, here is a list of the data for the 10 funds.

Figure 2: Data for 10 products ranked by three criteria

The base dates vary by product. The 1-year returns for the two mutual funds are as of the end of September 2026, the 6-month returns for the annual distribution types are as of the end of June, and the figures for 435A are as of the end of August. Returns for other ETFs use figures from a comparison article published in July 2026. 399A is a new product listed in July 2025, and 435A was listed in October 2025.

There are three things that can be read from this table.

First, the top three products track the same index. Tracers, 399A, and 1489 all track the ‘Nikkei 225 High Dividend Yield 50 Index.’ This index is composed of 50 stocks with high dividend yields from among the constituents of the Nikkei 225. Since the contents are almost identical, the differences are mainly in costs and the product structure (ETF vs. mutual fund). The trust fees are 0.165% for 399A and 0.10725% for Tracers, compared to 0.308% for 1489.

Second, mutual funds have the lowest costs. The two SBI funds are at 0.099%, and Tracers is at 0.10725%, both of which are lower than any of the ETFs.

Third, the returns for the past year are all around +40%. This is likely due more to the overall strength of Japanese stocks over the past year than to the inherent performance of the products. I will touch on this point again later.

Ranking for when you receive and spend dividends

If you want to receive dividends as living expenses or pocket money, I have ranked them by prioritizing yield, frequency of distribution, and cost.

1. Tracers Nikkei 225 High Dividend Yield 50 Index (Odd-Month Distribution Type)
   – Has a low trust fee and distributes six times a year (odd months). Over the past year, it paid 100 yen each time, for a total of 600 yen.

2. SBI Japan High Dividend Equity (Distribution) Fund
   – This product has the lowest cost among the 10. It distributes four times a year, and recent payments have been stable at 130 yen, 140 yen, 140 yen, and 140 yen. However, its 1-year return is lower than Tracers.

3. 399A
   – Tracks the same index as 1489, with a trust fee that is almost half. It distributes twice a year.

4. 1489
   – With net assets of approximately 580 billion yen, it is the largest and easiest product to trade. Its costs are higher than the top three products.

5. 1698
   – The yield is about 2.7%, and the 1-year return is lower than the top-ranked products.

6. 435A
   – The yield is about 4.0%, the highest among the 10, but it has only about one year of track record and its trust fee is also on the higher side.

7. 1651
   – While it has strong price appreciation, its yield is among the lowest of the 10.

1577 and 2084 were excluded from the ranking based on the ‘low expenses’ criterion because their trust fees are relatively high at 0.352% and 0.5225%, respectively.

The reason mutual funds ranked higher is not only due to their lower costs but also how they distribute dividends. Tracers distributes six times a year and SBI four times a year, and the amount per distribution does not fluctuate significantly. If you intend to receive and spend the money, the predictability of the amount is also an important factor.

Ranking for when you reinvest to grow your assets

If you do not plan to spend the dividends and your goal is to grow your assets, your perspective will change.

ETF dividends are not automatically reinvested. You must use the dividends deposited into your brokerage account to repurchase the shares yourself. On the other hand, for mutual funds, most brokerage firms allow you to select a ‘reinvestment course,’ where dividends are automatically used to purchase more of the same product.

For this reason, investment trusts are more advantageous if your goal is reinvestment.

1. Tracers Nikkei 225 High Dividend Yield 50 Index (held in reinvestment course)
   – This product has a high 1-year return of +43.4% and low costs.

2. SBI Japan High Dividend Equity Fund (Annual Settlement Type)
   – This type focuses on minimizing distributions and growing assets within the fund. There is no track record of distributions yet. Established in September 2025, its net assets are relatively small at approximately 6.2 billion yen.

3. SBI Japan High Dividend Equity (Distribution) Fund (held in reinvestment course)
   – This has the lowest costs and net assets of approximately 233.2 billion yen.

4. 1651
   – Because its yield is low among ETFs, the amount you need to reinvest yourself is small. The trust fee is also low for an ETF at 0.209%.

5. 399A
   – It is low-cost, but reinvestment must be done manually.

6. 1489
   – It is the largest in scale, but its ranking was lowered due to costs and the effort required for reinvestment.

435A has high distributions, and since you would have to repurchase everything yourself, I placed it outside the ranking for the purpose of reinvestment.

Here, there is a point to note regarding NISA. **In a NISA account, reinvested distributions also use up your annual investment quota.** Since the growth investment quota is 2.4 million yen per year, those planning to use the quota to its limit may find that the reinvested portion of distributions does not fit within the quota, leading to purchases in a taxable account.

Figure 3: How to choose products based on whether you ‘receive’ or ‘reinvest’

In that case, the second-ranked annual settlement type, which suppresses distributions in the first place, allows you to use your quota more efficiently. Conversely, if you do not plan to use up the 2.4 million yen per year, holding the top-ranked Tracers in the reinvestment course will not put you at a disadvantage.

Common weaknesses of top-ranked high-dividend ETFs and investment trusts

The top rankings were occupied by products linked to the Nikkei 225 High Dividend Yield 50 Index. However, I believe it is dangerous to accept these results at face value. There are two reasons for this.

The first is that recent performance has been too good.

Six out of the seven products for which 1-year returns are available fall within the +36% to +48% range. This means the impact of the overall rise in Japanese stocks is much greater than the differences between individual products. It is best not to assume that the same performance will occur next year.

There is also data looking at a slightly longer period. In a comparison article published in May 2025, the annualized return of stock prices from the beginning of 2020 to May 2025 is shown as follows.

During this period, 1489 stands out slightly. However, this is merely a fact that ‘this was the case for the past five years.’

The second point is that they fall significantly when the market drops.

The same article also lists the maximum decline rates for a period that includes the COVID-19 shock.

It is sometimes said that ‘high-dividend stocks are resilient to declines,’ but looking at these figures, every product has fallen by nearly 30%. The difference between products is only about 2 percentage points.

In other words, you must buy with the premise that ‘a 30% decline is possible’ regardless of which one you choose. This is even more true if you are holding them as funds for retirement.

How to position 435A (Dividend Rotation Strategy)

I will also organize my thoughts on 435A, which I initially included as a candidate.

435A has a different mechanism from the other nine. It does not track a specific index. It selects stocks with high expected dividend yields for the next payout from among those approaching their dividend record date within three months, and rotates them monthly. It is a strategy that aims to capture the right to receive dividends in sequence.

The numbers are eye-catching. As of the end of August 2026, the total return since inception was +45.40%. This outperforms the +36.50% of the TOPIX (including dividends) for the same period. The distribution yield is also 3.99%.

On the other hand, there are three points that concern me.

• The track record is only about one year: Listed in October 2025, it has not yet fully experienced a market downturn

• The trust fee is relatively high at 0.4125%: This is about four times that of low-cost mutual funds

• Distributions fluctuate by period: The four distributions so far have been 27 yen, 52 yen, 32 yen, and 58 yen. The management company also explains that distributions tend to be lower in January

While it is attractive in terms of ‘high price appreciation and high distributions,’ it does not meet the condition of ‘low expenses.’ Considering the short track record as well, I concluded that it should not be a core holding, and if I were to hold it, it would only be a small portion.

Three questions to apply to your own situation

I will summarize the content covered so far into questions to help you apply it to your own situation.

Question 1: Will you use the dividends for your current living expenses?

If you are receiving dividends without planning to use them and then buying the same product again, it is less hassle to choose a reinvestment course or a type with suppressed distributions from the start.

Question 2: Do you plan to use up your annual 2.4 million yen Growth Investment Quota?

• Yes → The reinvested portion might not fit within the quota. A once-a-year settlement type with suppressed distributions is a candidate.

• No → Even if you hold dividend-paying products in a reinvestment course, you are unlikely to have issues regarding the quota.

Question 3: Can you keep holding them even if they drop by 30%?

High-dividend products have the aspect of being easier to hold during market declines because you receive dividends. However, that does not mean the price movement itself is small. As we saw in the previous chapter.

Five steps to check before buying

Finally, I will summarize the confirmation steps before you actually buy.

1. Check if you can buy it as a target for the Growth Investment Quota at your securities company
   Even for target products, the availability of mutual funds differs by securities company. Since target products can also be reviewed, check again right before buying.

2. If buying an ETF, set the dividend receipt method to ‘Proportional Distribution Method’
   If this setting is not enabled, dividends will be taxed even if held in a NISA account. You can check this on your securities company’s account settings screen.

3. If buying a mutual fund, choose the dividend course
   You choose between ‘Receive’ or ‘Reinvest’ when buying. Match this to your answer for Question 1.

4. Check the settlement month and frequency of distributions
   If you intend to receive and use them, it is important to know when and how much you will receive. Even if it says four times a year, the amount is not necessarily the same every time.

5. Check the figures in the latest monthly report
   Trust fees, dividend yields, and net assets change. The figures in this article will also be outdated by the time you buy. Please check the latest figures in the monthly report on the asset management company’s website.

Summary

• A product with a higher dividend yield does not necessarily mean your assets will grow more. You need to look at the total return, which combines dividends and price movements.

• When ranked by the three criteria of ‘price appreciation, dividends, and expenses,’ low-cost products linked to the Nikkei 225 High Dividend Yield Stock 50 Index came out on top.

• The rankings change depending on whether you choose to receive dividends or reinvest them. If your goal is reinvestment, investment trusts that can reinvest automatically are more advantageous.

• In NISA, reinvested amounts also count toward your annual investment quota, so those who tend to use up their full quota may want to consider types that keep distributions low.

• The recent one-year return of around +40% is due to tailwinds in the overall market. During periods including the COVID-19 shock, all products saw declines of nearly 30%.

Personally, I intend to decide on my purchases for next year after verifying my own answers to the questions starting from Question 1. Rankings change based on how you weight the criteria. I hope you can use the data and the three questions in this article as material to reorder the options based on your own conditions.

Disclaimer

This article is intended for general information purposes only and does not recommend the buying or selling of specific financial products or any specific withdrawal strategy. Please invest at your own risk, make final investment decisions yourself, and consult with a professional if necessary.

Sources

(Confirmed as of October 13, 2026)

435A/1651 (Daiwa Asset Management)

ETFs linked to the Nikkei 225 High Dividend Yield Stock 50 Index (1489/399A)

Investment Trusts (Tracers, SBI, Shiki no Minori)

ETF 1-Year Returns, Yields, and Net Assets

• note article (Comparison of 15 Japanese high-dividend ETFs. Published July 8, 2026. Yields, returns, and net assets for 1489, 399A, 1577, 1651, 1698, 2084, and 2564)https://note.com/umaki11/n/n1d6e2191d385

• Comparison article on high-dividend ETFs (September 17, 2026. Yield and net assets for 1489, 1577, and 1651)https://jioinc.jp/investleaders/?p=13341

Annualized returns and maximum drawdown from 2020 to May 2025

NISA System