ETF Chart of the Day: Japan

September 24th at 12:04pm by Paul Weisbruch, Street One Financial

Last week, leading the way in outflows was an ETF that is likely familiar to most since it was conceived way back in 1996, making it a pioneer of some sorts. The iShares MSCI Japan (NYSEArca: EWJ) lost more than $300 million to outflows which is approximately 6% of the assets outstanding in the fund.

EWJ is commonly used by retail and institutional ETF investors as a proxy vehicle for the Japanese equity market, and the fund has mostly a large cap slant with weightings in names including Toyota Motor (5.39%), Mitsubishi UFJ Financial Group Inc. (2.86%), Honda Motor (2.50%), Sumitomo Mitsui Financial Group Inc. (2.06%), and Canon Inc. (1.83%).

Year to date, Japan’s equity market has simply not participated in the broader international equity rally, as EWJ is only up 2.62% versus the S&P 500 Index up 16.25% and the MSCI EAFE rallying 10.07% during the same time period. In the trailing one year time frame, the picture is even worse, as EWJ is roughly unchanged (+0.11%) versus the S&P 500 rising 28.48% and MSCI EAFE increasing 15.52%.

Trading volume has been considerably heavy in the past week in EWJ, as one can look at a chart and see several 20 million share plus days, and one gigantic 40 million share traded day (versus average daily volume of 8.8 million shares).

EWJ is by far the largest in terms of assets in the “Japan Equity” ETF space, and is nearly 10 times the size of the next biggest fund in the category which is DXJ (WisdomTree Japan Hedged Equity), which has approximately $572 million in assets under management.

In terms of returns YTD, NKY (Precidian MAXIS Nikkei 225 Index) has registered the best performance, rallying 6.36%. Other funds in this space that may experience greater than typical activity given the clear distribution that is occurring recently in EWJ include DFJ (WisdomTree Japan Small Cap Dividend), ITF (iShares S&P/TOPIX 150), JSC (SPDR Russell/Nomura Small Cap Japan), SCJ (iShares MSCI Japan Small Cap), JPP (SPDR Russell/Nomura PRIME Japan), DBJP (DB-X MSCI Japan Currency-Hedged Equity) and FJP (First Trust Japan AlphaDEX).

iShares MSCI Japan

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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