The WisdomTree Asia Pacific ex-Japan Fund (AXJL) made its debut on 06/16/2006, and is a smart beta exchange traded fund that provides broad exposure to the Asia-Pacific (Developed) ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $230.66 M, making it one of the average sized ETFs in the Asia-Pacific (Developed) ETFs. This particular fund, before fees and expenses, seeks to match the performance of the WisdomTree Asia Pacific ex-Japan Index.
WisdomTree Asia Pacific ex-Japan Index is a fundamentally weighted Index that measures the performance of dividend paying companies in the Asia Pacific ex-Japan region. The Index is comprised of 300 largest companies ranked by market capitalization that are incorporated in Australia, China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan & Thailand.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for AXJL are 0.48%, which makes it on par with most peer products in the space.
AXJL's 12-month trailing dividend yield is 4.33%.
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.
Looking at individual holdings, China Mobile Ltd accounts for about 7.19% of total assets, followed by Taiwan Semiconductor Manufacturing Co Ltd and Samsung Electronics Co Ltd.
AXJL's top 10 holdings account for about 31.84% of its total assets under management.
Performance and Risk
The ETF has lost about -5.76% so far this year and is up roughly 3.51% in the last one year (as of 06/26/2018). In the past 52-week period, it has traded between $64.82 and $75.33.
The ETF has a beta of 0.93 and standard deviation of 16.68% for the trailing three-year period, making it a medium choice in the space. With about 215 holdings, it effectively diversifies company-specific risk.
WisdomTree Asia Pacific ex-Japan Fund 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.
IShares MSCI All Country Asia ex Japan ETF (AAXJ) tracks MSCI All Country Asia ex Japan Index and the Vanguard FTSE Pacific ETF (VPL) tracks FTSE Developed Asia Pacific All Cap Index. IShares MSCI All Country Asia ex Japan ETF has $4.59 B in assets, Vanguard FTSE Pacific ETF has $4.80 B. AAXJ has an expense ratio of 0.69% and VPL charges 0.10%.
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.
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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WISDMTR-AP-JPN (AXJL): ETF Research Reports
ISHARS-MS AS-JP (AAXJ): ETF Research Reports
VANGD-FTSE PAC (VPL): ETF Research Reports
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