Launched on 06/16/2006, the WisdomTree Japan SmallCap Dividend ETF (DFJ) is a smart beta exchange traded fund offering broad exposure to the Asia-Pacific (Developed) ETFs category of the market.
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Wisdomtree. It has amassed assets over $263.21 million, making it one of the average sized ETFs in the Asia-Pacific (Developed) ETFs. Before fees and expenses, DFJ seeks to match the performance of the WisdomTree Japan SmallCap Dividend Index.
The WisdomTree Japan SmallCap Dividend Index is comprised of dividend-paying small capitalization companies in Japan.
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 DFJ are 0.58%, which makes it on par with most peer products in the space.
DFJ's 12-month trailing dividend yield is 1.57%.
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, Toyo Tire Co accounts for about 0.66% of total assets, followed by Nippon Gas Co Ltd and Matsui Securities Co Ltd.
Its top 10 holdings account for approximately 5.08% of DFJ's total assets under management.
Performance and Risk
Year-to-date, the WisdomTree Japan SmallCap Dividend ETF has added about 5.94% so far, and was up about 8.39% over the last 12 months (as of 04/21/2025). DFJ has traded between $70.93 and $81.42 in this past 52-week period.
The ETF has a beta of 0.41 and standard deviation of 15.85% for the trailing three-year period, making it a medium risk choice in the space. With about 773 holdings, it effectively diversifies company-specific risk.
Alternatives
WisdomTree Japan SmallCap Dividend 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 $11.56 billion in assets, iShares MSCI Japan ETF has $13.90 billion. BBJP has an expense ratio of 0.19% and EWJ charges 0.50%.
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
WisdomTree Japan SmallCap Dividend ETF (DFJ): ETF Research Reports iShares MSCI Japan ETF (EWJ): ETF Research Reports JPMorgan BetaBuilders Japan ETF (BBJP): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
