“In Japan, a differentiator of small-cap exposure is local-revenue sensitivity. In Japan SmallCaps Unhedged, for example, weighted average revenue from within Japan for constituents in the Consumer Discretionary sector was more than 80%,” notes Gannatti. “This is very different from the picture painted by Japan Global Exporters Hedged, which saw 34%.5 The conclusion: While both Indexes have significant exposure to Consumer Discretionary stocks, one is a play on the Japanese consumer, whereas the other is more of a play on the global consumer.”
Investors opting for an unhedged play can evaluate the WisdomTree Japan SmallCap Dividend Fund (NYSEArca: DFJ). The $298.8 million fund is up 9% over the past three months and also features its own robust consumer exposure as discretionary and staples combine for over a third of the fund’s weight.
DFJ tracks the WisdomTree Japan SmallCap Dividend Index (WTJSC), which weighs its almost 700 components based on annual paid dividends.
WisdomTree Japan Hedged Small Cap Fund
