As the Bank of Japan adheres to a loose monetary policy and the Federal Reserve moves toward hiking interest rates, currency risks will be an issue with overseas investments. Nevertheless, investors may utilize yen currency-hedged options to take a more pure play on the underlying Japanese markets.
Yen hedged ETFs have enjoyed strong gains after Prime Minister Abe introduced his so-called three arrows. Monetary easing and fiscal stimulus have buoyed Japanese equities and weakened the yen in the past few years.
Another option to consider is the recently launched Deutsche X-trackers Japan JPX-Nikkei 400 Equity ETF (NYSEArca: JPN) tracks the relatively new JPX-Nikkei 400 Index, which is also being used as a benchmark for Japan’s Government Pension Investment Fund, the largest pension fund in the world. [A New ETF for Japan’s Revitalized Equity Market]
Deutsche X-trackers MSCI Japan Hedged Equity ETF
