ETFs tracking Japan’s stock market were higher Tuesday while in currency markets the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) lost more than 1% following reports that Prime Minister Shinzo Abe may try to lower corporate taxes.
WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) and iShares MSCI Japan ETF (NYSEArca: EWJ) are the largest ETFs that invest in Japanese equities.
S&P Capital IQ was out with a note Tuesday comparing DXJ and EWJ.
The full S&P Capital IQ note is below:
ETF fund flows and strong performance year to date indicate there is a lot of interest in Japan. Below we take a look at some of the similarities and differences between two of the most successful ETFs at gathering assets this year, the WisdomTree Japan Hedged equity Fund (DXJ 46 Overweight) and the iShares MSCI Japan ETF (EWJ 11 Overweight).
The performance of the Japanese stock market this year has been nothing short of impressive. Year to date, the Nikkei 225 is up 35%, easily outperforming the S&P 500 Index’s strong 20% return. Popular ETFs DXJ and EWJ have gains of 25% and 18% respectively. These returns and investor optimism about aggressive Bank of Japan stimulus have helped iShares and WisdomTree bring in a combined $15 billion of new assets to their two flagship Japanese products. To understand what’s driving these ETFs and what might be ahead for them, we think understanding how the yen affects them is key.