Famed value investors and Berkshire Hathaway CEO Warren Buffett is taking a 5% stake on five top Japanese trading companies: Mitsubishi Corp., Itochu Corp., Marubeni Corp., Mitsui & Co. and Sumitomo Corp. ETF investors can tail Buffett’s bets with Japan-focused funds.
“It’s a nice tell that the Japanese market has been undervalued,” Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA Research, told CNBC’s “ETF Edge” on Monday.
According to a CNBC article, now could be the time to strike as “iShares MSCI Japan ETF (EWJ), the largest Japan-focused ETF on the market by assets, has seen about $3 billion of outflows in the past year, Rosenbluth said, citing CFRA. The WisdomTree Japan Hedged Equity Fund (DXJ) lost about $1 billion in the same time frame, he said.”
“Some of this money collectively is going into the BetaBuilders ETF, BBJP, which is a cheaper version of those two products,” Rosenbluth added, referring to the JPMorgan’s BetaBuilders Japan ETF. “But we do think that there’s an undervalued opportunity in some of these Japanese ETFs and … you get the benefits of diversification.”
Value-seeking investors could look to developing markets like Japan if they want to stay away from the heightened risk posed by investing in emerging markets. AS such, one fund to consider is the Xtrackers Japan JPX-Nikkei 400 Equity ETF (JPN), which seeks investment results that correspond generally to the performance, before fees and expenses, of the JPX-Nikkei 400 Net Total Return Index.
The index is designed to track the performance of equity securities of issuers who are primarily listed on the following sections of the Tokyo Stock Exchange (“TSE”): the 1st section, the 2nd section, Mothers or JASDAQ. The fund will invest at least 80% of its total assets in component securities of the underlying index.
Investors looking for exposure to Japan can look at exchange-traded funds (ETFs) like the Xtrackers MSCI Japan Hedged Equity ETF (DBJP). DBJP seeks investment results that correspond generally to the performance, of the MSCI Japan US Dollar Hedged Index.
The fund, using a “passive” or indexing investment approach, seeks investment results that correspond generally to the performance, of the underlying index, which is designed to track the performance of the Japanese equity market while mitigating exposure to fluctuations between the value of the U.S. dollar and the Japanese yen. It will invest at least 80% of its total assets in component securities (including depositary receipts in respect of such securities) of the underlying index.
For more market trends, visit ETF Trends.com.