The largest Japaese fund, iShares MSCI Japan ETF (NYSE:EWJ), has been up as much as 3% on the day today following the BOJ decision, and it’s worth noting a few other lesser-known Japanese ETFs as well.
Headlines are plastered today with news that Japan will keep its accommodative stance to revive the economy and inflation, and it is well known that the BOJ is an active and large participant in the fixed income as well as ETF markets. EWJ briefly flirted with its 50 day MA just four trading sessions ago before today’s tremendous gap-up rally on the BOJ signals, marking the highest level that the ETF has traded at since last August.
EWJ has seen substantial outflows year-to-date with more than $5.5 billion leaving the fund. This does not change the fact that EWJ still is the home of about $14 billion in assets, and averaging a massive 34 million shares traded daily. Thus, it has the ability to attract and lose assets in larger clips on a regular basis depending on how institutions are positioning themselves.
Some EWJ Alternatives
These year-to-date outflows are not confined to just EWJ, as DXJ (WisdomTree Japan Hedged Equity, Expense Ratio 0.48%) has seen about $5.6 billion leave the fund this year in very similar fashion, but the fund is still the home to a substantial $6.8 billion. This fund averages a fraction of the daily trading volume that EWJ does, with 6.6 million shares trading on an average daily basis, but it is the second largest ETF in the “Japan Equity” space by a large margin.
The third largest fund in the space is DBJP (Deutsche MSCI Japan Hedged Equity, Expense Ratio 0.45%, $1.3 billion in AUM). There are thirty-nine individual ETFs classified in the greater “Japan Equity” space, but there is a steep drop-off in terms of asset size after the three aforementioned funds, with strategies ranging from “SmallCap Dividend” in the case of DFJ (WisdomTree Japan SmallCap Dividend, Expense Ratio 0.58%) to “Hedged Real Estate” via DXJR (WisdomTree Japan Hedged Real Estate, Expense Ratio 0.48%), to SCIJ (GlobalX Scientific Beta Japan, Expense Ratio 0.38%) to name a few.
Given the large move up just today in Japan’s equity market, which is rippling through linked ETFs, we are also watching the levered bull EZJ (ProShares Ultra MSCI Japan, Expense Ratio 0.95%, $12.7 million in AUM) as well as JPNL (Direxion Daily Japan Bull 3X, Expense Ratio 0.95%, $10.3 million in AUM). Both funds
remain curiously small and relatively unnoticed given the popularity and heft in EWJ, but this may also change in quick fashion, given the renewed BOJ-fueled interest in Japanese equities.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.
Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.
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