Japan’s exchange traded fund (ETF) iShares MSCI Japan Index (EWJ) already has had tough couple of months. Currently, it’s down 3.7% year-to-date. News that the country’s Prime Minister Shinzo Abe will resign is not likely to help the ETF or the confidence in Japan’s economy.

The Prime Minister has made headlines a few times this year, most recently with his party’s large defeat. In a press conference, Abe said, "In the present situation it is difficult to push ahead with effective policies that win the support and trust of the public. I have decided that we need a change in this situation," according to Chisaki Watanabe for the Associated Press.

This recent announcement reminds ETF investors that one of the drawbacks to investing abroad is that the foreign-based ETFs tend to react stronger to positive and negative political news and events.

Tags: Japan