Since small-cap companies are more focused on local growth, they have been able to rally from the economic turnaround more so than their large-cap counterparts. The iShares MSCI Japan Index (NYSEArca: EWJ) lost 1.3% over the past week, while the WisdomTree Japan Total Dividend Fund (NYSEArca: DXJ) lost 4.7% over the same time period. These large-cap ETFs have had a tougher time during the economic recovery since they focus on export industries. Any strength in the Japanese yen can also have an adverse impact on the export industry. While the small-cap focused ETFs have had a positive run over the past week, they still lag large-cap focused Japan stock ETFs in year-to-date performance. [Currency-Hedged ETF Falls with Japan Stocks, Higher Yen]
“We have been taking more of a neutral stance in the past seven years, but what prompted us to increase our exposure was Abenomics,” Yukihiro Sugihara, Hayate’s founder, said in a telephone interview with Bloomberg. “The recent selloff doesn’t quite mean game over.”
WisdomTree Japan SmallCap Dividend Fund
Tisha Guerrero contributed to this article.