Currency-Hedged ETFs to Capitalize on Increased Japanese Stimulus

Japanese Prime Minister Shinzo Abe announced an additional stimulus package to support the economy, sending the yen lower and supporting market gains, with currency-hedged Japan exchange traded funds leading the charge.

On Wednesday, the WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) rose 1.6%, iShares Currency Hedged MSCI Japan ETF (NYSEArca: HEWJ) gained 1.0% and Deutsche X-trackers MSCI Japan Hedged Equity ETF (NYSEArca: DBJP) increased 0.9%. The currency-hedged ETFs outperform non-hedged funds when the local currency depreciates against the U.S. dollar.


Meanwhile, the non-hedged iShares MSCI Japan ETF (NYSEArca: EWJ) was flat Wednesday while the CurrencyShares Japanese Yen Trust (NYSEArca: FXY) was 1.1% lower.

The yen weakened to ¥105.71 against the U.S. dollar.

Japan revealed a surprisingly large 28 trillion yen or $265 billion, economic stimulus package on Wednesday, surpassing estimates for a 20 trillion yen package, reports Herbert Lash for Reuters.

Abe said the details of the package will be compiled next week.

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