• SPDR Russell/Nomura Small Cap Japan (NYSEArca: JSC): up 7.5% year-to-date

Note that consumer discretionary sector accounts for around 20% weightings in broad market and small-cap Japan ETFs. The broad market portfolio includes global auto manufacturers and consumer electronic firms, whereas the small-cap portfolios contain domestic-oriented restaurants, retailers and apparel manufacturers. Industrials, materials and information technology are export-oriented. The small-cap ETFs available have similar weightings except SCJ may be more exposed to financials.

Before the economic recovery can freely come about, the DPJ has to deal with a complex bureaucracy and large budget deficit. Another potential problem is the appreciating Japanese yen against the U.S. dollar. A higher yen may be better for local businesses, but it also means more costly exports. The biggest concern is the country’s rapidly aging population.

For more information on Japan, visit our Japan category.

Max Chen contributed to this article.