It has been a little over one year since the start of Abenomics
in Japan, a program from Prime Minister Shinzo Abe to boost the
Japanese economy. This three pronged approach, which leans heavily
on an easy money policy, was met by skepticism by many, but it has
certainly helped to increase stock prices (in yen terms) by a huge
Japan ETFs: One Year After Abenomics
In fact, the Nikkei soared more than 50% in 2013, the best yearly
performance in more than 40 years for the key Japanese benchmark.
But after such a huge gain, can investors hope for another big year
from the nation?
We think it may be possible, especially given the extreme easing
measures that the Bank of Japan is engaged in, and the prospect for
continued expansion of this program later in 2014. Plus, with the
taper in the U.S., the yen is likely to fall against the dollar,
further helping to make Japanese exports competitive in key global
markets. And to top things off, Japanese stocks remain at
reasonable valuations, so there is still hope from a value look.
How to Play
Given the huge currency risks in this market, a look to hedged ETFs
seems like a great bet. That is because these remove the currency
risks of the yen falling against the dollar for U.S. investors,
potentially allowing for outperformance if the yen remains weak
Time to Bet on Japan Hedged ETFs?
Fortunately, there are two such large cap focused funds which fit
this bill, the
WisdomTree Japan Hedged Equity Fund (
db-X MSCI Japan Hedged Equity Fund (
. Both of these funds had an amazing 2013 and easily outperformed
their unhedged counterpart, the
iShares MSCI Japan ETF (
But for more on these ETFs, and the broad Japan market, make sure
to watch our short video on the subject below:
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DB-XT MS JAP HD (DBJP): ETF Research Reports
WISDMTR-J HEF (DXJ): ETF Research Reports
ISHARS-JAPAN (EWJ): ETF Research Reports
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