Invest in Abenomics without the Currency Risk

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

This week’s growth-oriented exchange-traded fund (ETF) offers investors exposure to Japanese equities while hedging away the currency risk to let you sleep better at night. The WisdomTree Japan Hedged Equity Fund (DXJ) is pegged to an index that holds the biggest and best Japanese stocks.

The story for investing in Japan is an interesting one. The country has been locked in a deflationary spiral for almost three decades, and that has been the chief contributor to the decades-long decline in the benchmark Nikkei 225 index. Given that history and other downbeat factors, you would think that the Japanese equity investment landscape would be somewhat barren.

Yet nothing could be further from the truth. In fact, over the past three years, the Nikkei 225 has trounced the performance of stocks in developed markets such as Europe and here at home, spiking more than 43% vs. gains of some 8% in Europe’s STOXX 50 and nearly 25% in the S&P 500.

Japan continues to put the pedal to the metal on “Abenomics” — the economic reforms promoted by the country’s Prime Minister Shinzo Abe — which means more quantitative easing from the Bank of Japan, and likely more upside for Japanese stocks. Most recently, the Japanese central bank has fearlessly waded into negative-rate territory in a move that has led to a recent rise in Japanese stock prices.

View the current price, volume, performance and top 10 holdings of DXJ at ETFU.com.

While global stock market conditions have weighed on DXJ, which is down 15% year to date, the fund is poised to rally on the back of domestic stimulus, and offers a more promising near-term potential than many other developed economies. DXJ has around $11 billion in assets under management, an expense ratio of 0.48% and a distribution yield of 3.77%.

Exclusive  Booking a 150% Option Gain

sc

DXJ is invested in consumer discretionary and industrial companies, which make up nearly half of its holdings, as well as information technology, consumer staples, financials, health care and other sectors. DXJ’s top holdings include Japan Tobacco (5.24%), Toyota (4.87%), Canon (3.80%), Mitsubishi UFJ Financial (3.62%) and Takeda Pharmaceuticals (3.16%).

If you think it might be advantageous to pay attention to the Japanese equity story, the WisdomTree Japan Hedged Equity Fund (DXJ) might be a good place to start.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

previous article

Stock Buybacks inflate earnings per share. Corporations can fool investors who don't notice if net income or top-line revenue has stagnated.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE