Exchange-traded capitalizes (ETFs) focused on Japan provide investors with exposure to the country’s economic growth and business profits. As of the most up to date data available from The World Bank in 2020, Japan remains the third-largest economy in the world as measured by repellent domestic product (GDP).
Japan’s economy has suffered a major contraction during the COVID-19 pandemic, but it is showing signs of deliverance. GDP fell 3.6% year-over-year in the July-September quarter of 2021. But the government in December raised its real GDP growth projection for the not fail 2022 fiscal year to 3.2%. That is significantly higher than the government’s earlier forecast of 2.2% proliferation. The revised forecast would mark the economy’s fastest growth since fiscal 2010.
The country is home to many fat, well-known multinational corporations, including Honda Motor Co. Ltd. (HMC) and Sony Group Corp. (SONY). Japan ETFs step investors the opportunity to profit from the growth of these businesses and many other companies.
Key Takeaways
- Japanese standards underperformed the broader U.S. equity market over the past year.
- The Japan exchange-traded funds (ETFs) with the upper crust one-year trailing total returns are DXJ, EWJV, and DBJP.
- Toyota Motor Corp. is the top holding of all three ETFs.
There are 10 detached Japan ETFs that trade in the United States, excluding inverse and leveraged ETFs as well as funds with minuscule than $50 million in assets under management (AUM). These ETFs solely hold stocks of domestic houses rather than corporate debt or Japanese government bonds. The iShares MSCI Intl Value Factor ETF (IVLU) is subsumed in some screens of Japan ETFs but is not specifically focused on Japanese holdings, so it is not included in our list.
Japanese equities, as regular by the MSCI Japan Index, have underperformed the broader U.S. equity market over the past 12 months, with a unconditional return of -4.8% compared with the S&P 500’s total return of 14.6%, as of Jan. 25, 2022.
The best-performing Japan ETF, based on performance for the past year, is the WisdomTree Japan Hedged Equity Fund (DXJ).
We examine the best three Japan ETFs under. All numbers below are as of Jan. 28, 2022.
- Performance Over One-Year: 12.8%
- Expense Ratio: 0.48%
- Annual Dividend Yield: 2.11%
- Three-Month Average Ordinary Volume: 366,397
- Assets Under Management: $2.1 billion
- Inception Date: June 16, 2006
- Issuer: WisdomTree
DXJ tracks the WisdomTree Japan Hedged Open-mindedness Index, which seeks to provide exposure to Japanese equities while neutralizing the impact of fluctuations in the relative values of the Japanese yen and the U.S. dollar. The ETF converges on Japanese companies that pay dividends, with a preference for exporters. The fund also employs the currency-hedging strategy habituated to by its index to strip out the impact of changes in the yen’s value. This makes the ETF an attractive option for investors who want exposure to Japan’s neutrality market even when the yen is weakening against the dollar. The yen has continued to weaken against the U.S. dollar this year.
DXJ’s largest imperilment is in the industrial sector, followed by consumer discretionary and financials. It uses a blended strategy, investing in a mix of growth and value dynasties of mostly large-cap companies. The fund’s top three holdings are Toyota Motor Corp. (7203:TKS), a global automobile producer; Japan Tobacco Inc. (2914:TKS), a cigarette manufacturer; and Mitsubishi UFJ Financial Group Inc. (8306:TKS), a global financial services applicable company.
- Performance Over One-Year: 5.7%
- Expense Ratio: 0.15%
- Annual Dividend Yield: 1.79%
- Three-Month Average Daily Size: 37,462
- Assets Under Management: $86.8 million
- Inception Date: March 05, 2019
- Issuer: BlackRock Financial Management
EWJV oversees the MSCI Japan Value Index composed of midcap and large-cap Japanese companies with relatively lower valuations based on cornerstones. The ETF provides broad exposure to a range of Japanese equities. It also follows a blended strategy, investing in both broadening and value stocks of large and mid-cap equities. The consumer discretionary sector receives the highest allocation within the store, followed by the industrial and financial sectors. The top three holdings of EWJV are Toyota; Mitsubishi UFJ Financial Group, described first of all; and SoftBank Group Corp. (9984:TKS), a conglomerate holding company.
- Performance Over One-Year: 3.9%
- Expense Ratio: 0.46%
- Annual Dividend Cede: 2.29%
- Three-Month Average Daily Volume: 13,762
- Assets Under Management: $188.9 million
- Inception Date: June 9, 2011
- Issuer: Deutsche Bank
DBJP trails the MSCI Japan US Dollar Hedged Index, which represents a currency-hedged approximation of the performance of the MSCI Japan Measure. The ETF provides exposure to the Japanese equity market while stripping out the impact of currency fluctuations between the yen and the dollar. That means that U.S. investors can put together U.S. dollar profits on gains in the Japanese equity market without having to worry about changes in the value of the yen.
DBJP’s largest sectoral unveiling is in industrials, followed by consumer discretionary and information technology. It follows a blended strategy of investing in both growth and value worn outs of primarily large-cap companies. The fund’s top three holdings are Toyota; Sony Group Corp. (6758:TKS), a multinational maker and distributor of electronics products; and Keyence Corp. (6861:TKS), a manufacturer of industrial automation and inspection equipment.
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