NEW YORK ( TheStreet) -- The outlook for Japan's economy is far from perfect and the country has several issues confronting it, such as large government debt, an aging population, and persistent deflation. However, the country's annualized GDP figure though for the fourth quarter of 2009 was recently reported to be the best figure since the first quarter of 2008, signaling an improved economic outlook for the world's second largest economy. Even better, these ETFs are among the best performing international ETFs in 2010, with small gains compared to losses for many European and emerging market ETFs. Investors that want exposure to Japan should know what their choices are and here are the best fund options for three different strategies of investing in Japan.
For ETF investors interested in Japanese large-cap companies, iShares MSCI Japan Index Fund ( EWJ) is the best choice. The fund's top three holdings are Toyota ( TM), Mitsubishi UFJ Financial Group, and Honda Motor ( HMC) Corp. The fund has 327 total holdings though, which is a relatively large number for a country-specific ETF, with the top three holdings account for only 5.2%, 3.0%, and 2.6%, respectively. The four most prominent sectors, which account for a combined 70.1% of the fund, are consumer discretionary, industrials, financials, and information technology. EWJ has a lower expense ratio than its mutual fund equivalents and its trading popularity gives it ample liquidity. Also, in a sign of investor bullishness on the fund, EWJ saw $232 million flow into the ETF last month.