On the downside, the Japanese economy could experience structural and demographic challenges, especially in the area of labor productivity with an aging population. Furthermore, global trade war is also a major concern as large caps source 57% of their revenues from within Japan while almost half of the remaining foreign revenues are from the U.S. and China.

ETF investors who are interested in gaining exposure to Japan have a number of country-specific options to choose from, including the iShares MSCI Japan ETF (NYSEArca: EWJ) for broad Japan exposure, iShares MSCI Japan Small-Cap ETF (NYSEArca: SCJ) to target the smaller segment and iShares MSCI Japan Minimum Volatility  ETF(NYSEArca: JPMV) to smooth out any potential volatility ahead.

If you are worried about the weakness in the Japanese yen but are also bullish on the Japanese market, the iShares Currency Hedged MSCI Japan ETF (NYSEArca: HEWJ) and iShares Adaptive Currency Hedged MSCI Japan ETF (BATS: DEWJ) provide currency-hedged exposure to Japan.

For more information on the Japanese markets, visit our Japan category.