Japan Hedged ETF Gets Another Supporter
By Benzinga News
The WisdomTree Japan Hedged Equity Fund (NYSE: DXJ), already
one of 2013's best ETFs both in terms of performance and asset-gathering, can
add another superlative to its list as S&P Capital IQ rated the fund
Overweight in a new research note.
A large part of DXJ's allure has been its ability to hedge
exposure to fluctuations between the value of the U.S. dollar and the Japanese
yen. While DXJ has gained 30 percent over the past 90 days, the rival iShares
MSCI Japan Index Fund (NYSE: EWJ), which does not hedge USD/JPY fluctuations,
is up just 11.8 percent.
The correlation between Japanese stocks and price action in
USD/JPY speaks to another unique attribute possessed by DXJ. That being the
ETF's constituents are Japanese stocks that derive the bulk of their revenue
outside of Japan, an added bonus when considering Japan's domestic economy is
still struggling and that the weaker yen can provide immediate benefits to the
country's exporters.
"We expect Japan's equity markets to underperform in
2013 as increasing government fiscal stimulus, BoJ quantitative easing, and
increased investor risk appetite stemming from improving global growth serve to
weaken the yen's safe-haven appeal, diluting U.S. dollar-denominated Japanese performance,"
S&P said in the note.
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