DXJ was up 18.1% year to date through March 27, compared with a gain of 11% for EWJ, according to Morningstar.
“This fund is an attractive option during periods when the yen is falling against the dollar,” says Morningstar analyst Patricia Oey in a report on DXJ.
Investors have flocked to the ETF on expectations new Japanese Prime Minister Shinzo Abe will force the yen even lower in an effort to stoke inflation and help the economy. The WisdomTree fund also tilts its portfolio toward exporters that generate more revenue outside Japan.
“In the December 2012 general election, the Liberal Democratic Party returned to power, with its leader Shinzo Abe promising to revive domestic growth,” Oey notes. “He has indicated that he plans to push the Bank of Japan to adopt a formal inflation target of 2% and use ‘unlimited’ easing to achieve it. Many economists expect the yen to weaken in 2013, which could provide a near-term boost to Japan’s exporters and Japan’s stock market.”
WisdomTree Japan Hedged Equity Fund
