The past two days have been a bloodbath in Japan ETFs but funds that hedge their currency exposure have suffered even more as the yen strengthens.

For example, WisdomTree Japan Hedged Equity (NYSEArca: DXJ) and db X-trackers MSCI Japan Hedged Equity Fund (NYSEArca: DBJP) were down 3.6% and 3.8%, respectively, in early trading Friday after the previous day’s wipeout. [Japan ETFs Tumble]

Meanwhile, iShares MSCI Japan (NYSEArca: EWJ) slipped 2.4% at last check Friday. This ETF does not hedge its currency exposure to the Japanese yen. Therefore, EWJ will perform better than DXJ and DBJP when the yen strengthens against the U.S. dollar, and vice versa.

CurrencyShares Japanese Yen Trust (NYSEArca: FXY) was up 0.7% on Friday after the previous session’s gain.

Japanese ETFs have been among the best-selling funds this year so analysts will be watching the week-end flow data for any signs investors are bailing out.

As of Thursday’s close, WisdomTree Japan Hedged Equity (DXJ) was up 36.6%, according to Morningstar. The ETF is on track for a loss of nearly 7% this week.

WisdomTree Japan Hedged Equity

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