The WisdomTree Japan Hedged Equity Fund (NYSEArca:DXJ) crossed
the $2 billion threshold on Friday, the latest sign that ETF
investors grasp how to take full advantage of Japan's plan to
weaken its yen and provide its export economy with a shot in the
arm to help end the country's nearly 25 years of deflation.
DXJ, which had a whopping creation worth $400 million on Friday
that was crucial in pushing it over $2 billion, now makes up about
10 percent of WisdomTree's $20.13 billion in total assets under
management, according to data compiled by IndexUniverse.
"Newly elected Prime Minister Shinzo Abe has been very effective
through his plans and aggressive rhetoric to weaken the yen, and as
a result, there has already been improved market sentiment in the
world's third largest economy," WisdomTree Director of Research
Jeremy Schwartz said in a press release trumpeting DXJ's crossing
the $2 billion in assets threshold.
DXJ takes off the table the dollar-yencurrency cross-something
the oldest and biggest Japan ETF, the $5.8 billion iShares MSCI
Japan Index Fund (NYSEArca:EWJ) doesn't do. The yen's losses
have been a huge variable, shaving 15 percentage points off returns
for U.S. investors over the past three months, according to
IndexUniverse's latest Currency Impact Report that's based on MSCI
In other words, while local Japanese investors have had returns
of 26 percent in the past three months, U.S. investors have gained
just 11 percent, with the 15 percentage-point gap linked to the
yen's losses against the dollar.
"There's definitely a broad risk-on move in Asian equities that
has been helping DXJ," said Paul Weisbruch, an ETF trader with King
of Prussia, Pa.-based Street One Financial, who said he has seen a
jump in interest recently in both EWJ and DXJ.
The chart below, which illustrates the price differences since
the end of last year's third quarter between DXJ, EWJ and the
CurrencyShares Yen Trust (NYSEArca:FXY), shows pretty clearly how
the yen's losses, as measured by FXY, have been a millstone for
EWJ. And DXJ pretty much dodges the bullet.
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