Launched on 06/16/2006, the WisdomTree Japan Hedged Equity ETF (DXJ) 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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 managed by Wisdomtree. DXJ has been able to amass assets over $6.47 billion, making it one of the larger ETFs in the Asia-Pacific (Developed) ETFs. Before fees and expenses, DXJ seeks to match the performance of the WisdomTree Japan Hedged Equity Index.
The WisdomTree Japan Hedged Equity Index is designed to provide exposure to Japanese equity markets while at the same time neutralizing exposure to fluctuations of the Japanese Yen movements relative to the U.S. dollar.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for DXJ are 0.48%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.12%.
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.
When you look at individual holdings, Japanese Yen (jpy)accounts for about 100% of the fund's total assets, followed by Toyota Motor Corp and Mitsubishi Ufj Financial Group.
The top 10 holdings account for about 127.94% of total assets under management.
Performance and Risk
So far this year, DXJ return is roughly 15.6%, and it's up approximately 53.77% in the last one year (as of 02/12/2026). During this past 52-week period, the fund has traded between $95.74 and $166.65.
The fund has a beta of 0.38 and standard deviation of 19.86% for the trailing three-year period, which makes DXJ a medium risk choice in this particular space. With about 434 holdings, it effectively diversifies company-specific risk .
Alternatives
WisdomTree Japan Hedged Equity ETF is an excellent option for investors seeking to outperform the Asia-Pacific (Developed) ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $16.29 billion in assets, iShares MSCI Japan ETF has $18.61 billion. BBJP has an expense ratio of 0.19% and EWJ changes 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.
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WisdomTree Japan Hedged Equity ETF (DXJ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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