Popular WisdomTree Japan ETF Gets a Small-Cap Cousin

ETF Trends

The WisdomTree Japan Hedged Equity Fund (DXJ) is a king among men when it comes to asset-gathering proficiency in 2013. In 2013, the hedged yen ETF has raked in almost $7.9 billion in fresh assets as retail investors and financial advisors have embraced Japanese equities.

Given DXJ’s stunning transformation from relative obscurity to household name, it is not surprising that issuer WisdomTree (WETF) is looking to capitalize on that success with the introduction of a small-cap equivalent. Investors will get just that when the WisdomTree Japan Hedged SmallCap Equity Fund (NYSEArca:DXJS). DXJS will charge 0.58% per year, slightly more than the 0.48% charged by DXJ. [Retail Investors Still Like Japan ETFs]

DXJS will track the WisdomTree Japan Hedged SmallCap Equity Index, which is comprised of small-caps listed in Tokyo, Osaka or on the JASDAQ, Japan’s equivalent of the Nasdaq.

To be included in the index, companies must meet the following criteria: (i) be incorporated within Japan and traded on the Tokyo, JASDAQ, or Osaka Stock Exchanges; (ii) payment of at least $5 million in cash dividends on common shares in the annual cycle prior to the annual Index rebalance; (iii) have a market capitalization of at least $100 million as of the Index rebalance; (iv) have an average daily trading volume of at least $100,000 for three months preceding the Index rebalance; and (v) have trading of at least 250,000 shares per month for each of the six months preceding the Index rebalance,” according to WisdomTree.

Like DXJ, DXJS will feature a hedged yen component that will could help the new small-cap fund outperform its unhedged rivals. Year-to-date, DXJ is up 22.8% compared to 14.6% for the rival iShares MSCI Japan Index Fund (EWJ).

WisdomTree, as do several other issuers, offers an unhedged Japan small-cap ETF. The WisdomTree Japan SmallCap Dividend Fund (DFJ) has $221.6 million in assets under management.

DXJS is not the only new WisdomTree ETF debuting today. The firm is also introducing the WisdomTree U.K. Hedged Equity Fund (NYSEArca:DXPS). That ETF will track the WisdomTree United Kingdom Hedged Equity Index and provide a hedge against the U.S. dollar’s fluctuations against the British pound.

In addition to DXJ, WisdomTree offers the WisdomTree Europe Hedged Equity Fund (HEDJ). HEDJ, which was converted to a hedged euro dividend play last August, has attracted nearly $299 million in assets this year. [Europe ETF Hedges Euro Risk]

WisdomTree Japan Hedged Equity Fund

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ETF Trends editorial team contributed to this piece. Tom Lydon’s clients own shares of DXJ.

 

 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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