Investors seeking to cash in on the Japanese stock market face a Catch-22. The government is trying to goose the economy by, among other things, lowering the value of the yen, a move designed to make Japanese exporters more competitive (see Japan’s Rebound Is for Real). But a falling yen harms U.S. investors because money they have in Japanese securities translates back into fewer bucks. Enter WisdomTree Japan Hedged Equity (symbol DXJ), an exchange-traded fund that invests in the stocks of dividend-paying Japanese firms that have a market value of at least $100 million.
SPECIAL REPORT: Foreign Stocks and Emerging Markets
As its name suggests, the fund aims to give U.S. investors exposure to Japanese stocks while insulating them from fluctuations in the yen. That was clearly the way to go over the past year, as the unhedged Nikkei 225 soared 61%, despite a May selloff, while the yen declined 22% against the dollar. Because of its currency hedging, the WisdomTree ETF beat unhedged Japanese-stock ETFs by an average of 25 percentage points over the past year.
To qualify for the WisdomTree ETF, a firm must generate at least 20% of its sales outside of Japan. Americans will find most of the holdings unfamiliar, although the ETF does contain a few iconic giants, such as Canon and Honda. No stock can account for more than 5% of the ETF’s assets, and no sector can represent more than 25% of the portfolio, although holdings sometimes surpass those limits between annual rebalancings.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Stock Market Today: Stocks Rally Despite Rising Geopolitical TensionThe main indexes were mixed on Tuesday but closed well off their lows after an early flight to safety.
-
What's at Stake for Alphabet as DOJ Eyes Google's ChromeAlphabet is higher Tuesday even as antitrust officials at the DOJ support forcing Google to sell its popular web browser. Here's what you need to know.
-
The 5 Best Actively Managed Fidelity Funds to Buy Nowmutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
-
The 12 Best Bear Market ETFs to Buy NowETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
-
Don't Give Up on the Eurozonemutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
-
Best Bond Funds to BuyInvesting for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
-
Vanguard Global ESG Select Stock Profits from ESG Leadersmutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
-
Kip ETF 20: What's In, What's Out and WhyKip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
-
Do You Have Gun Stocks in Your Funds?ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
