The amount of money investors are throwing at WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) is simply breathtaking.
The ETF has more than doubled in size just so far in 2013 on a furious rally and massive inflows.
Year to date, the fund has gathered inflows of more than $2.1 billion, placing it second on the list of best-selling ETFs behind iShares MSCI Emerging Markets (NYSEArca: EEM), according to IndexUniverse data. These are huge inflows for what is now a roughly $3.5 billion ETF.
DXJ invests in Japanese stocks but hedges its exposure to the movement of the yen. Therefore, it has outperformed unhedged Japan ETFs as the yen plummets following the election of Shinzo Abe as prime minister. Abe is committed to pressuring the Bank of Japan to take further easing measures to weaken the yen and assist Japan’s struggling economy. [Currency-Hedged Japan ETFs]
The db-X MSCI Japan Currency-Hedged Equity Fund (NYSEArca: DBJP) follows a similar strategy. [Yen-Hedged Japan ETFs Soar on Easing Speculation]
DXJ and DBJP are both up more than 30% the past three months to double the return of iShares MSCI Japan (NYSEArca: EWJ), which does not hedge its currency exposure. CurrencyShares Japanese Yen Trust (NYSEArca: FXY), which tracks the movement of the yen against the U.S. dollar, is down over 15% the last three months.
‘Lion’s share’ of ETF inflows
“The Japanese market has been on a tear, but with any foreign market you need to deconstruct the returns,” writes Thomas Brakke at the Research Puzzle blog, noting the “amazing decline” in the yen.