Why Investors Should Consider Yen-Hedged Japan ETFs?

DXJ has a focus on bigger stocks, as 63% are in large caps and 32% are in mid caps. The ETF has posted good returns of 39.24% as of Jun 30 on a one-year basis.

Furthermore the fund has a decent yield of 2.02% and has an average daily volume of 2.77 million shares a day. DXJ currently has a Zacks ETF Rank of ‘1’ or Strong Buy.

db X-trackers MSCI Japan Hedged Equity Fund (NYSEARCA:DBJP)

Launched in June 2011, DBJP tracks the MSCI Japan US Dollar Hedged Index offering an exposure to Japan and a hedge against any fall in the currency. The large blend fund has an asset base of $150.6 million and charges 50bps in fees.

The product holds 320 stocks in total and its top 10 holdings contribute 24% to the fund. DBJP is tilted more towards large cap stocks which contribute almost 60% with a moderate exposure in mid-cap stocks adding 36% to the fund. The ETF has posted solid returns of 49% as of June 30 for the trailing one-year period (also read Is NKY A Better Japan ETF?).

Furthermore the fund has a yield of 0.73% and has an average daily volume of 29,000 shares a day. The fund has good offerings in its space, but has been lately overlooked by potential investors. DBJP currently has a Zacks ETF Rank of ‘2’ or Buy.

The Bottom Line

Japanese exports have recently suffered due to a rise in yen, but this is a temporary phase and the yen may go down again soon. Prime Minister Abe’s policy will continue to push the currency down, which will favor these ETFs.

The markets had reacted positively earlier this year and trends are likely to continue with the NIKKEI touching 15,000 levels. Given this, it may be time for investors to take advantage of the situation and consider hedged Japan ETFs for exposure.

This article is brought to you courtesy of Eric Dutram.

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