Investing in foreign equities amid such a complicated year for geopolitical and rising rate concerns hasn’t been easy, but Japan has recently been a bright spot. While the strictness of China’s zero-COVID policies remains a challenge for investing in the massive country, Japan has been a bright spot, with recent news buoying the case to consider a Japan ETF like the Franklin FTSE Japan ETF (FLJP).
The nation recently reported increased retail sales for the eighth month in a row, with the Japanese government’s emphasis on increasing tourism paying dividends. The country saw more than twice as many foreign visitors in October than in September.
What’s more, the nation has taken steps to address inflation with a $200 billion economic stimulus plan announced last month, with the central bank intent on supporting the economy by maintaining its low interest rates. Corporate earnings remain solid in the archipelago nation according to recent government reports, with factory output crucially showing signs of recovery as well.
FLJP, which charges just nine basis points to track the FTSE Japan RIC Capped Index, led all Japan-specific ETFs in four-week net inflows with $57 million. FLJP tracks an index of large and mid-size Japanese firms, with a 2.1% annual dividend yield that outpaces both the ETF Database Category Average and the FactSet Segment Average’s 1.47% and 1.35% annual dividend yields.
FLJP can also claim the third-highest YTD net inflows of $178 million, with solid performance to this year as well returning 11.42% over one month. That also outpaces the performance averages for the ETF Database Category and the Factset Segment Average by at least 2%. The strategy holds Toyota Motor Corporation (TM ) at 4.9%, Sony Group Corporation (SONY) at 2.8%, and Keyence Corporation (KYCCF) at 2.3%.
Investors looking to add foreign equities to balance their U.S.-focused holdings may have been put off by geopolitical and inflation-related uncertainty so far this year. Japan may be one area that offers some interesting opportunities as its economy slowly starts to kick back into gear. For those investors intrigued by a reopening of Japanese tourism and retail economy, keep an eye on FLJP in the weeks ahead.
For more news, information, and analysis, visit the Volatility Resource Channel.
VettaFi is an independent publisher and takes responsibility for our edit staff, research, and postings. Franklin Templeton is not affiliated with VettaFi and was not involved in drafting this article. The opinions and forecasts expressed are solely those of VettaFi and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.