🌅Japan ETFs: The Rising Sun of 2025 Investment Opportunities

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Hello, fellow ETF enthusiasts!

Exciting news is brewing across the Pacific: Japan has become the hottest investment theme of 2025, and it’s about time! After years of economic stagnation, this vibrant market is finally capturing the interest of investors. Picture Japan as a vintage sports car tucked away in a garage for ages—overlooked but brimming with potential. Upon closer examination, it becomes clear that the Japanese market is poised to make a strong comeback. Let’s gear up for this thrilling ride!🗾

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Why Japan ETFs?

Japan's investment renaissance isn't happening by accident. Several powerful forces are converging to make Japanese equities irresistible to global investors:

• 🤝Corporate Governance Revolution: Japanese regulators are urging companies to enhance shareholder returns, with rising share buybacks driving the Japanese equity market. Japan Inc. finally recognises the value of treating shareholders well!

• 💰The Great Wage Liberation: In 2024, Japanese corporations offered pay raises that exceeded the inflation rate, finally providing workers with meaningful increases after decades of wage stagnation and boosting consumer spending power.

• 💴Currency Tailwinds: Cyclical factors, such as the carry trade, yen weakness, and increased risk tolerance, are expected to support Japanese stocks, making exports more competitive globally.

• 🌱Structural Improvements: Japan offers solid structural reflation credentials, including labour supply shortages driving real wage gains and steady improvements in corporate governance, profit margins and return on equity.

• 📈Record Market Performance: Japan's benchmark Nikkei 225 has extended its winning streak, with most Asia-Pacific markets on an uptrend. The Nikkei 225 is up approximately 10% year-to-date, in line with the S&P 500.

• 🚀Foreign Investment Surge: Recent Japanese asset appreciation reflects positive policy steps aimed at enhancing corporate governance and expanding market access to foreign investment.

  

  The Japanese Bull: Riding the Wave of Economic Reform

🏆Top Japan ETFs

Ready to dive into the specific ways you can add some Japanese flair to your portfolio? Let's explore the top Japan ETF players that are making waves in 2025.

1. iShares MSCI Japan ETF (EWJ)

Inception: 1996-03-12

Expense Ratio: 0.50%

Provider: iShares

Past 5 Years Annualised Performance: 8.35%

Covered in our ETF UNO edition, EWJ is by far the most popular ETF option for exposure to Japanese stocks and is the oldest ETF focusing on this market. EWJ is very well-diversified for an international equity ETF, holding hundreds of individual stocks and generally avoiding significant concentrations in any single large name.

2. JPMorgan BetaBuilders Japan ETF (BBJP)

Inception: 2018-06-15

Expense Ratio: 0.19%

Provider: JP Morgan

Past 5 Years Annualised Performance: 8.53%

$BBJP ( ▲ 0.48% ) tracks a diversified index of large and mid-size Japanese companies at an excellent price. JPMorgan priced its BetaBuilders ETF line-up to compete with other low-cost providers. It offers broadly similar exposure to EWJ, and its lower cost makes BBJP a worthy alternative.

3. WisdomTree Japan Hedged Equity Fund (DXJ)

Inception: 2006-06-16

Expense Ratio: 0.48%

Provider: WisdomTree

Past 5 Years Annualised Performance: 25.47%

$DXJ ( ▲ 0.29% ) offers investors exposure to the Japanese equity market while protecting against currency fluctuations. It focuses on export-oriented, dividend-paying Japanese companies of all sizes that generate less than 80% of their revenue from Japan.

4. Franklin FTSE Japan ETF (FLJP)

Inception: 2017-11-02

Expense Ratio: 0.09%

Provider: Franklin Templeton

Past 5 Years Annualised Performance: 8.67%

$FLJP ( ▲ 0.85% ) tracks an index of large and mid-sized Japanese stocks, giving investors a focused way to invest in Japan's economy. Its management fee is significantly lower than average, and it accurately represents the majority of the Japanese stock market.

5. Xtrackers MSCI Japan Hedged Equity ETF (DBJP)

Inception: 2011-06-09

Expense Ratio: 0.45%

Provider: Xtrackers (DWS)

Past 5 Years Annualised Performance: 18.08%

With a Morningstar 4-star rating, $DBJP ( ▲ 0.43% ) brings German precision (provided by DWS) to Japanese investing. Like DXJ, it removes currency risk from the equation.

⛩️Rising Sun, Rising Returns

Japan's investment outlook for 2025 is shaped by long-term fundamental changes, rather than its strong recent performance alone. Corporate governance reforms, wage growth, and structural enhancements pave the way for sustained outperformance.

For exposure to Japan, consider EWJ or FLJP for broad access, BBJP for cost efficiency, and DXJ or DBJP to hedge against currency risk.

Investing in Japan is about recognising enduring changes that may lead to significant returns. The Land of the Rising Sun is full of opportunities.

Discover endless possibilities with ETFs in the vibrant ETF UNO community! Join us for innovative strategies, trends, and insights to elevate your portfolio. From emerging markets to sector rotations, we're here to empower your ETF investing journey.

Wishing you a fantastic weekend filled with insightful reading, and may your portfolios soar!💹

DISCLAIMER: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.