This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Guide to Japan ETFs

NEW YORK ( TheStreet) -- ETF investors have a slew of options when it comes to Japan and ex-Japan exposure, but the island's tepid performance in the past year hasn't attracted that many investors, meaning several ETFs, including most leveraged ETFs, have very low volume.

However, Japan may be of more interest in the future. It was reported last week that the Japanese economy grew at an annualized pace of 4.9% in the first quarter of this year.

The growth of Japan's economy is promising as demand for its exports is becoming more diversified. Last year, China overtook the United States as the number one destination for Japanese goods shipped abroad.

There are also signs that Japan's domestic economy is picking up as household spending increased at an annualized rate of 1.3% in the first quarter of this year.

For exposure to the Japanese economy, the most heavily traded ETF that provides investors with access is iShares MSCI Japan Index (EWJ).

EWJ is filled with large-cap Japanese companies and its top ten holdings feature familiar names such as Toyota (TM - Get Report), Sony (SNE - Get Report) and Canon (CAJ - Get Report). The ETF has more than 325 holdings, meaning that a lack of diversity among companies is not a concern with this fund.

From a sectoral standpoint, EWJ is also well distributed. The four sectors with the largest distribution of net assets from largest to smallest are consumer discretionary, industrials, financials and information technology.

For investors who want to take a small-cap approach to Japan, the most liquid option is WisdomTree Japan Small Cap Dividend (DFJ). There are two other options for small-cap exposure in SPDR Russell/Nomura Small Cap Japan (JSC) and iShares MSCI Japan Small Cap Index Fund (SCJ), but their low trading volumes raise liquidity concerns.

In the large-cap spectrum of funds, there are many alternatives to EWJ but most of them trade with low volume.

One that trades with a fair amount of volume and offers investors a unique approach to the Japanese markets is WisdomTree Japan Hedged Equity (DXJ).

Unlike EWJ, DXJ gives investors the ability to gain exposure to Japanese markets while hedging their investment against currency fluctuations.

Foreign equity ETFs such as EWJ that do not hedge against currency movements will change in value based on the share movements of their holdings plus the change in the value of the country's currency against the U.S. dollar. For instance, if the yen increases in value against the dollar by 5% in a month, EWJ will increase by 5%, plus or minus the performance of its underlying holdings.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAXJ $52.18 -1.20%
JSC $52.87 -0.88%
DFJ $54.98 -0.47%
EPP $38.98 -1.40%
FXY $90.38 -0.60%


Chart of I:DJI
DOW 17,639.02 -111.89 -0.63%
S&P 500 2,049.89 -13.48 -0.65%
NASDAQ 4,724.1240 -39.10 -0.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs