Categories: AsiaCurrenciesExchange Traded Funds (ETFs)

New Japanese Small-Cap ETF Fund Is Promising

Chatham House

Earlier this year, I wrote about taking advantage of Abenomics and the Bank of Japan’s plan to create inflationary, yen-weakening pressures in the Japanese economy to spur exports and growth. One of this year’s many new exchange-traded funds (ETFs), WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), plays right into that strategy.

For that reason, I want to introduce you to DXJS. The fund seeks to reproduce, before fees and expenses, the performance of an index of small-cap Japanese equities. The index hedges against exposure to fluctuations between the value of the U.S. dollar and the Japanese yen. Specifically, the index is designed to have higher returns when the yen is weakening relative to the U.S. dollar. This fund is non-diversified.

The fund has gained 10.79% since its inception date of June 28, 2013. There have been no dividends issued as yet.

The fund is heavily weighted towards industrials, 26.66%, and consumer discretionary, 24.38%. Other sectors include materials, 11.65%; financials, 11.16%; consumer staples, 10.39%; information technology, 9.98%; and health care, 4.32%. The top 10 holdings constitute only 6.42% of this ETF’s assets. The top held companies are Iida Group Holdings Co Ltd, 0.85%; Denki Kagaku Kogyo K K, 0.73%; Ube Industries Ltd/Japan, 0.69%; Tokai Tokyo Financial Holdings, 0.69%; and Kinden Corp, 0.69%.

This fund is attractive not only because it’s a play in a recovering Japanese market and because it’s a small-cap fund (and therefore focused on selling to the second-largest developed economy in the world), but also because it uses a hedging strategy to take advantage of a deliberate policy of weakening the yen against the dollar. If this all seems like good news to you, you may be interested in WisdomTree Japan Hedged SmallCap Equity Fund (DXJS).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/