Japan's Rising ETF Plays

Anyone with, ahem, a yen for investing in Japan has dealt with limited choices when it comes to exchange-traded funds. The iShares MSCI Japan Index Fund(EWJ Quote) and the S&P/Topix 150 Fund(ITF Quote) are almost identical.

Toyota(TM Quote) represents the largest holding in each ETF, followed by several bank stocks, with Honda Motor(HMC Quote) mixed in too. It should be no surprise that the two have a very tight correlation, 0.968. Both funds have a beta greater than 1.4, compared with the S&P 500 at 1.0. Neither has much of a yield -- EWJ yields 0.44%, and ITF yields 0.32%.

While Japan is obviously a popular investment destination, I have never been a fan. A roadblock for me is that after years of interest rates at zero percent, the economy still is not quite healthy. I would rather have a clearer visibility for growth that most other Asian markets offer.

So before looking into the latest ETF offerings, be sure to ask yourself if Japan even belongs in your portfolio. And if you're still gung-ho, you're in luck. In the last few months there have been several new ETFs launched, offering different exposure to Japan.

Wisdom Tree Branches Out

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