After Japanese Prime Minister Shinzo Abe pledged to pressure the Bank of Japan into an unlimited monetary easing policy, investors are positioning for a weaker yen and higher Japanese stocks. Consequently, one Japan exchange traded has doubled its assets in under a month.
The WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ), an ETF that hedges against depreciation in the Japanese yen and tilts toward export companies, now has over $2 billion in assets. DXJ is up more than 20% the past three months.
“Newly elected Prime Minister Shinzo Abe has been very effective through his plans and aggressive rhetoric to weaken the yen, and as a result, there has already been improved market sentiment in the world’s third largest economy,” Jeremy Schwartz, WisdomTree Director of Research, said in a press release.
Alternatively, investors can also take a look at the db-X MSCI Japan Currency-Hedged Equity ETF (NYSEArca: DBJP), which provides exposure to the MSCI Japan Index while mitigating changes in changes in the exchange rate. It has also risen over 20% the last three months.
In comparison, the iShares MSCI Japan (NYSEArca: EWJ), which tracks the MSCI Japan Index and does not hedge against currency fluctuations, is up about 9% the past three months.
The CurrencyShares Japanese Yen Trust (NYSEArca: FXY) fell to a new multiyear low on Friday after Vice Finance Minister Takehiko Nakao announced Japan “will take appropriate action if necessary” after gains in the yen, according to the Dow Jones Newswires.
The yen’s recent slide “should be be regarded as a correction from the one-sided and excessive appreciation that took place up to last year,” Nakao said, MarketWatch reports.