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DXJ and DBJP: Comparing Japan’s Hedged Equity ETFs

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Aug. 11 2015, Published 3:01 p.m. ET

Japan hedged equity ETFs DXJ and DBJP

The WisdomTree Japan Hedged Equity ETF (DXJ) offers exposure to the Japanese equity market and hedges its risk of fluctuations between the US dollar and the Japanese yen. The ETF tracks the performance of the WisdomTree Japan Hedged Equity Index.

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According to the WisdomTree website, compared to an equivalent currency-unhedged investment, the index and the DXJ fund give higher returns when the value of the Japanese yen falls relative to the US dollar and lower returns when the US dollar falls against the Japanese yen. The ETF invests in the stocks of Japanese companies. Its top holdings include Toyota Motor Corporation (TM), Mitsubishi UFJ Financial Group (MTU), and Nissan Motor (NSANY).

Along similar lines, the Deutsche X-trackers MSCI Japan Hedged Equity ETF (DBJP) replicates the performance of the MSCI Japan US Dollar Hedged Index before fees and expenses.

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The index and the DBJP ETF provide exposure to Japanese equities. DBJP hedges fluctuations between the value of the US dollar and the Japanese yen. The fund’s top holdings include Toyota Motor Corporation (TM), Mitsubishi UFJ Financial Group (MTU), and Honda Motor (HMC).

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Both DXJ and DBJP invest in Japanese equity. Their assets under management total $18,026.6 million and $1,362 million, respectively. The expense ratio is 0.48% for DXJ and 0.45% for DBJP. An expense ratio is a fund’s operating cost per $1,000 invested. Here, it’s $48 per $1,000 invested for DXJ. It’s calculated annually. The lower the ratio, the better the fund’s management of the operating cost.

Let’s move on to a structural analysis of DXJ and DBJP in the next part of this series.

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