Hi David, I plan to invest in Japan, either through the hedged (DXJ) or unhedged (EWJ) ETF. Which would you recommend at this time. Thanks,

David Fuller's view

Thanks for an interesting question which may be of general interest.

I do not have a strong view on this, although I think it is a good idea to be long of Japan, preferably picked up on setbacks as it is temporarily overbought following the strong recovery since late September. 

However, in your shoes I would probably give the nod to DXJ which is the Wisdom Tree Japan Hedged Equity Fund.  The iShares MSCI Japan ETF has a similar performance and the small discounts to NAV are almost identical as you can see from Bloomberg’s description pages for Wisdom Tree Japan and also iShares MSCI Japan.  However, EWJ is considerably smaller so there could be a liquidity problem with large orders.  Also, DXJ gives you currency hedge protection and I think that the USD is likely to rise somewhat further against JPY over the longer term.