Bet on These Japanese ETFs as Nikkei Soars to Record High

Investor optimism around the Japanese equity market is on full display as the Nikkei 225 surged past the historic 57,000-point mark in intraday trading on Feb. 9, 2026, setting a new record. This powerful rally was ignited by the landslide election victory of prime minister Sanae Takaichi, with the Liberal Democratic Party (“LDP”) winning a supermajority in parliament.

This win puts Japanese stocks across diverse sectors — from technology and machinery to defense and construction — as well as the exchange-traded funds (ETFs) that hold them, firmly in the spotlight.

Before suggesting a few such ETFs for your portfolio, let us examine the factors behind the record run in Japanese stocks and assess whether it is sustainable. The idea is to help you make an informed decision.

What Drove the Nikkei 225’s Record Run?

The primary driver of Nikkei 225’s rally is undoubtedly "Sanaenomics," Takaichi’s aggressive economic agenda. Central to this upbeat market sentiment is her proposed 21 trillion-yen (approximately $0.13 trillion) stimulus package, along with a plan to suspend the 8% sales tax on food for two years.

The prospect of significant fiscal stimulus, including targeted investments in high-growth sectors, such as defense, AI, and semiconductors, is expected to lift consumer spending and economic growth, fueling buying sentiment in the Japanese stock market.
In addition, sectors like advanced manufacturing and energy infrastructure have seen a recent boost as the government prioritizes digital sovereignty and next-generation nuclear power.

These factors, combined with a strengthening yen, rising longer-dated bond yields, and expectations that corporate reforms will continue to enhance returns on equity, have likely driven increased demand for Japanese equities of late.

Will Nikkei’s Rally Sustain?

The outlook for the Japanese equity market remains robust, buoyed by the prospect of decisive government action, though not without cautionary notes. 

Although analysts remain optimistic that Takaichi’s strong mandate will reduce political gridlock and enable a faster rollout of growth-focused policies, major financial institutions are expressing more measured optimism amid fiscal concerns. While growth-positive, the stimulus plan raises significant questions about funding for a country that already carries the highest debt burden in the developed world.

To this end, it is imperative to mention that Goldman Sachs Research forecasts Japan’s TOPIX index to return 10% in the coming 12 months, amid the challenges of U.S. trade policy. The report published by Goldman Sachs also mentioned that sticky inflation, accompanied by quite solid wage growth, should benefit demand-related Japanese stocks.

Japanese ETFs in the Spotlight

The combination of a stimulant government policy and robust consumer demand makes this an opportune time to consider diversified exposure to the Japanese stock market. In light of these developments, investors may consider adding the following Japanese equity ETFs to their portfolios, as they are positioned to capture the broader market optimism.

iShares MSCI Japan ETF EWJ

This fund, with net assets worth $17.73 billion, offers exposure to 181 large and mid-sized companies in Japan. It traded at a good volume of 7.41 million shares in the last trading session. 

EWJ has surged 30% over the past year and 3.7% in the last trading session. It charges 49 basis points (bps) as fees and holds a Zacks Rank #2 (Buy).

JPMorgan BetaBuilders Japan ETF BBJP

This fund, with net assets worth $15.52 billion, offers exposure to 180 stocks traded primarily on the Tokyo and Nagoya Stock Exchanges. It traded at a good volume of 1.73 million shares in the last trading session. 

BBJP has soared 29.9% over the past year. It went up 3.7% in the last trading session. It charges 19 bps as fees and holds a Zacks Rank #2.

iShares MSCI Japan Value ETF EWJV 

This fund, with net assets worth $665 million, offers exposure to 107 large- and mid-cap Japanese stocks with lower valuations based on fundamentals. It traded at a volume of 0.21 million shares in the last trading session. 

EWJV has rallied 40.8% over the past year and 3.6% in the last trading session. It charges 15 bps as fees and holds a Zacks Rank #2.

WisdomTree Japan Opportunities Fund OPPJ  

This fund, with net assets worth $165.6 million, offers exposure to 118 small, mid and large-cap Japanese stocks. It traded at a volume of 0.32 million shares in the last trading session. 

OPPJ has rallied 59.8% over the past year and 4.4% in the last trading session. It charges 58 bps as fees and holds a Zacks Rank #2.
 

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This article originally published on Zacks Investment Research (zacks.com).

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