Last year, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and the iShares MSCI Japan ETF (NYSEArca: EWJ) were not only two the top-performing developed markets ETFs, the two were among the most prolific asset-gathering ETFs of any type.
The db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) was also one of the best Japan ETFs in terms of performance and those gains helped DBJP be one of the best asset-gathering ETFs on a percentage basis. [Falling Yen Boosts Japan ETFs]
With the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) up more than 3% year-to-date, Japan ETFs, both the currency hedged and unhedged funds, are struggling to start 2014. That is not keeping investors away.
“Once again 80% of the flows into Japan Equity Funds were yen denominated, with some of those flows being attributed to Japanese investors pulling out of emerging markets assets and bringing their money back to Japan. Fund managers are expecting that 4Q13 data will show GDP grew for the fifth consecutive quarter despite the lack of promised structural reforms. The one reform in place – a planned hike of the national sales tax to close the country’s budget deficit – is being viewed with some trepidation because of its potential impact on domestic consumption,” Barron’s reported, citing EPFR Global data.
Flows to U.S.-listed Japan ETFs confirm investors are still banking on further upside for Japanese stocks and more downside for the yen. [Japan ETFs Down But Not Out]
Since the start of 2014, DXJ has taken in almost $290 million while inflows to EWJ are approaching $228 million. Investors have poured almost $116 million into DBJP. Earlier this month, Deutsche Asset & Wealth Management lowered DBJP’s expense ratio to 0.45% per year from 0.5%. [Deutsche Bank Lowers Fees on Germany, Japan ETFs]