Japanese Stocks Rallied Five Weeks In A Row After Warren Buffett’s Bet, Outperforming A Nearly Flat S&P 500 WisdomTree Japan Hedged Equity Fund ARCA:DXJ

Established in 1878, the Tokyo Stock Exchange (TYO), or Tosho, is the largest stock exchange in Japan. It’s owned and run by the Japan Exchange Group, which is ranked fifth globally in terms of the biggest stock exchange operators, according to market capitalisation based on data from October 2021. DBJP tracks the MSCI Japan US Dollar Hedged Index, which represents a currency-hedged approximation of the performance of the MSCI Japan Index. The ETF provides exposure to the Japanese equity market while stripping out the impact of currency fluctuations between the yen and the dollar.

• Debt-ceiling fears may have also inspired some “doomsday preppers” to pile into Japanese stocks as a safe-haven play, Kleintop said.
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• But the economy also suffered its fair share of unprecedented circumstances, one of which is leading to an intriguing case for Japan stocks to buy.
• No, it doesn’t have anything to do with the fact that I worked there previously.

It is designed, like other hedged equity funds, to neutralize exposure to the Japanese yen in the event forex swings took place relative to the U.S. dollar. It blends growth stocks and value stocks that are primarily large capitalization companies traded on the Tokyo stock exchange. What is most admirable about Marty Whitman, by the way, is his refusal to deem any strategy, even a hyperactive day-trader, a “dumb” one. We all owe much thanks to Graham & Dodd, and to those who have added to the value discipline over the years with their generous sharing of thoughts and strategy. There are 11 distinct Japan ETFs that trade in the United States, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). These ETFs solely hold stocks of domestic companies rather than corporate debt or Japanese government bonds.

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It follows a blended strategy of investing in both growth and value stocks of primarily large-cap companies. The index is composed of large- and mid-cap Japanese equities and strives to mitigate exposure to fluctuations between the value of the Japanese yen and the U.S. dollar. It is the hedged version of the iShares MSCI Japan ETF (EWJ), another popular Japan-focused fund. Industrials, consumer discretionary, and information technology stocks are the three largest portions of the portfolio. The companies that have deep links with the Japanese economy were selected for the list.

• Over the previous three years, DXJ has significantly outperformed EWJ by more than 50% due to a sharp rise in the dollar’s relative value to the yen.
• The following table contains links to detailed analysis for each ETF in the Japan Equities.
• Then again, if you have a longer-term outlook, Panasonic remains a leader in EV battery technology.
• Considering that retail revenge has spurred substantial increases in spending to make up for a lost year in 2020, this narrative bodes well for Japan stocks.
• That means Japanese stocks should still look attractive to U.S. investors.

For investors who are income-oriented, it provides a nice dividend of 1.56% at the time of our research. The EWJ expense ratio is 0.49% which is above the category average of 0.40% but you will typically find international ETFs have slightly higher expense ratios given the extra costs of due diligence and management. Thematic Strategist Trevor Noren explores how active management and a global lens could provide tech investors with essential edges moving forward. Japanese stocks are largely trouncing the U.S. market in 2023, and there may be plenty of fuel for further outperformance, analysts said.

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As I write this, inbound tourism is at a booming all-time high, led by Chinese vacationers, and the weak yen is a boon to spending within the country. Japanese household net-savings amount to ~US$15 trillion and less than 10% of that is invested in equities. Furthermore, the Japanese have good and inexpensive national healthcare insurance, ditto higher education, and therefore, the drag from healthcare bills https://investmentsanalysis.info/ (insurance and treatment) and student loans that hurts America, is essentially non-extant. What we can add to this are some ancillary points that further support investing in deeply undervalued Japanese equities. We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions.

Meanwhile, data shows Japanese stocks enjoying solid inflows after a long stretch of money going the other way. Despite Japan’s outperformance, Bank of America’s May global fund-manager survey showed Best japanese stocks portfolio managers remained a net 11% underweight in Japanese stocks, Rosenberg said. This value investor will continue to seek the best investment opportunities within his circle of competence.

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During his time at MarketWatch, Watts has served in key roles in the Frankfurt, London, New York and Washington, D.C., newsrooms. And the price-to-book ratio in Japan stands at just 1.3 times, compared with 1.8x in Europe and 4.0x in the U.S., which provides firmer floor and higher ceiling for Japanese stocks based on valuation metrics alone, Rosenberg argued. In addition, companies are announcing solid earnings, valuations are cheap and long-term investors are positioned in the market. Japanese equities, as measured by the MSCI Japan Index, have underperformed the broader U.S. equity market over the past 12 months, with a total return of -13.0% compared with the S&P 500’s total return of -2.5%, as of Aug. 17, 2022. The best-performing Japan ETF, based on performance over the past year, is the WisdomTree Japan Hedged Equity Fund (DXJ). The country is home to many large, well-known multinational corporations, including Honda Motor Co.

Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive. Algorithm forecasting site Wallet Investor says Nintendo’s stock price could increase to $774.27 by January 2027. Based on data compiled by Market Watch, 11 analysts gave the stock a ‘buy’ rating, four analysts recommended a ‘hold’, one tagged it as ‘underweight’ and two suggested a ‘sell’. Based on data compiled by Market Watch, 13 analysts have given the stock a ‘buy’ rating and three have it at ‘overweight’.

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Then again, if you have a longer-term outlook, Panasonic remains a leader in EV battery technology. If you want to dial up the risk-reward factor for your Japan stocks, PCRFY might fit the bill. If Mitsubishi UFJ was a tough proposition for Japan stocks to buy given the longstanding challenges affecting the underlying economy, then you may want to brace yourself with Panasonic’s inclusion. While a generally popular name over the last several years due to its technologies for electric vehicle batteries, Panasonic suffered one of the unfortunate hallmarks of life in the information age — a cyber attack. On the flipside, Charles Schwab noted in late September that Japanese firms feature the best upward earnings revisions trend of all major countries.

The pull and push for investors began with Buffett’s endorsement of Japan and Tokyo Stock Exchange’s call for capital efficiency improvement. Global investors are returning to Japan in 2023 after three straight years of pulling out, with foreign flows into Japanese equities and futures at $30 billion so far this year, according to UBS. If you want to read about some more Japanese stocks, go directly to 10 Best Japanese Stocks to Invest in 2022. With AUM of $270.8 million, Xtrackers MSCI Japan Hedged Equity ETF trades in an average daily volume of 15,000 shares and charges 45 bps in fees per year. Until Buffett publicly stated his desire to boost his holdings of Japanese stocks, the Nikkei and the S&P 500 had almost equal year-to-date performance, as the chart below shows.