Japan ETFs-More Than Meets The Eye

At first glance Japan’s exchange traded funds (ETFs) may not excite investors but take into consideration the MSCI Japan Index. It was up 35.5% in 2003, 14.8% in 2004, and 24.7% in 2005, with a slowdown in 2006, giving returns of 5.5%. Stock prices are still 60% below their peak in 1989. Carl Delfeld of Chartwell Advisors believes Japan is at the heart of Asian growth and many of its companies represent a smart, quality play for economic expansion in the area. He is referring to the urge to overlook Japan and invest directly into emerging markets like China or India. Japanese companies have ties in emerging Asia, especially Southeast Asia.

Japan’s central bank reports households with outstanding financial assets totaling $12.6 trillion. Even better, some Japanese seem to be allocating some of this cash to stocks. For ETFs, look into iShares MSCI Japan Index (EWJ), giving exposure to over 350 companies. iShares S&P/Topix 150 Index (ITF) gives exposure to Toyota and Mitsubishi as top holdings.