Designed to provide broad exposure to the Asia-Pacific (Developed) ETFs category of the market, the WisdomTree Japan Hedged Equity ETF (DXJ) is a smart beta exchange traded fund launched on 06/16/2006.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Wisdomtree, DXJ has amassed assets over $7.14 billion, making it one of the larger ETFs in the Asia-Pacific (Developed) ETFs. DXJ, before fees and expenses, seeks to match the performance of the WisdomTree Japan Hedged Equity Index.
The WisdomTree Japan Hedged Equity Index is designed to provide exposure to Japanese equity markets while at the same time neutralizing exposure to fluctuations of the Japanese Yen movements relative to the U.S. dollar.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.48%.
It has a 12-month trailing dividend yield of 0.96%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Japanese Yen (jpy)accounts for about 100% of the fund's total assets, followed by Mitsubishi Ufj Financial Group and Sumitomo Mitsui Financial Group.
Its top 10 holdings account for approximately 128.48% of DXJ's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree Japan Hedged Equity ETF return is roughly 22.61% so far, and it's up approximately 40.93% over the last 12 months (as of 08/21/2026). DXJ has traded between $124.43 $182.64 in this past 52-week period.
The fund has a beta of 0.40 and standard deviation of 20.12% for the trailing three-year period, which makes DXJ a medium risk choice in this particular space. With about 430 holdings, it effectively diversifies company-specific risk .
Alternatives
WisdomTree Japan Hedged Equity ETF is a reasonable option for investors seeking to outperform the Asia-Pacific (Developed) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
JPMorgan BetaBuilders Japan ETF (BBJP) tracks MORNINGSTAR JAPAN TRGT MRKT EXPOSURE ID and the iShares MSCI Japan ETF (EWJ) tracks MSCI Japan Index. JPMorgan BetaBuilders Japan ETF has $18.79 billion in assets, iShares MSCI Japan ETF has $22.19 billion. BBJP has an expense ratio of 0.19% and EWJ changes 0.49%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Asia-Pacific (Developed) ETFs
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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WisdomTree Japan Hedged Equity ETF (DXJ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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