• Dividend Growers Saw Weight Increase – The companies that saw their weight increase at the rebalance had a median dividend growth that was typically 20 percentage points higher than the companies that saw weight reduced at the rebalance.
• Underperformers Typically Saw Weight Increase – Performance is also a key driver of relative changes. The typical stock that saw its weight increase had a median total return that was 9 to 13 percentage points lower than the median of stocks that had weight lowered.
Conclusion
We interpret Japan’s current valuations and record Dividend Stream® levels as very positive indicators of underlying market fundamentals. We believe these fundamentals, coupled with the ongoing “third arrow” Abenomics reforms, should help provide a notable foundation for potential future gains. The annual rebalance is a key element of the added value of WisdomTree’s Index methodology and can help manage valuation risks going forward.
To read the full research on our Japan Index rebalance, click here.
Important Risks Related to this Article
Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments focused in Japan are increasing the impact of events and developments associated with the region, which can adversely affect performance. Dividends are not guaranteed and a company’s future abilities to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.