The currency-hedged ETFs outperform non-hedged funds when the local currency depreciates against the U.S. dollar, but these funds have been underperforming as the JPY surged against the USD this year.
SEE MORE: Hedged Japan ETFs to Capitalize Off Additional Stimulus
“Investor sentiment toward the Yen shows roughly 70% of traders are currently bullish. As sentiment is typically used as a contrary indicator, that’s clearly a bearish headwind for the Yen,” adds See It Market.
A depreciating yen is supporting Japanese markets as a weaker currency bolsters the country’s large export industry.
For more information on the Japanese markets, visit our Japan category.