"When the yen weakens, Japanese stocks can deliver strong returns in their home market but disappointing results for U.S. investors. Currency moves can erase gains. That's the problem WisdomTree Japan Hedged Equity Fund (NYSEARCA:DXJ) was designed to solve. In 2024, it returned 34% while the S&P 500 gained 16%. DXJ holds 430 Japanese companies that pay dividends and generate at least 20% of revenue from outside Japan. These are exporters like Toyota (NYSE:TM), Mitsubishi UFJ Financial (NYSE:MUFG), and Sumitomo Mitsui Financial (NYSE:SMFG)."
"The fund uses forward currency contracts to neutralize yen-dollar fluctuations, allowing investors to capture Japanese equity returns without currency headwinds. That hedging strategy added over 7 percentage points of outperformance in 2024. The unhedged alternative, iShares MSCI Japan ETF (NYSEARCA:EWJ), returned 27% over the same period. The difference represents what investors would have lost to unfavorable currency movements. What You Get Beyond Performance DXJ yields 3.1%, providing modest income alongside capital appreciation potential."
WisdomTree Japan Hedged Equity Fund (DXJ) targets 430 dividend-paying Japanese companies that derive at least 20% of revenue from outside Japan, emphasizing exporters. The fund uses forward currency contracts to hedge yen-dollar exposure so investors capture Japanese equity returns without currency translation effects. In 2024 the hedging added over seven percentage points of outperformance versus an unhedged alternative. DXJ yields about 3.1% and distributes dividends plus hedging gains or losses, producing quarter-to-quarter variability. The fund charges a 0.48% expense ratio, holds roughly $4.8 billion in assets, and trades at about 16x earnings.
Read at 24/7 Wall St.
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