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.