DXJ

DXJ, the WisdomTree Japan Hedged Equity Fund, is an exchange-traded fund that provides exposure to Japanese equities while hedging against fluctuations in the Japanese yen relative to the U.S. dollar. The fund is managed by WisdomTree Investments and trades on major U.S. exchanges.

Investment objective and index: The fund seeks to track the performance of the WisdomTree Japan Hedged Equity Index, before fees and expenses. The index targets large- and mid-cap Japanese stocks and applies a currency hedge intended to neutralize yen movements against the dollar, aiming to deliver returns linked to Japanese equity performance with reduced currency impact.

Strategy and holdings: DXJ typically holds a diversified basket of Japanese equities across sectors, focusing on established companies in the export and domestic-growth areas. Hedging is implemented through currency hedges, often using forward contracts or other instruments, to mitigate the effect of yen fluctuations on a USD-denominated investor.

Fees and risks: As with similar ETFs, DXJ charges an annual management fee reflected in its expense ratio, which is generally in the mid-percent range. The fund is subject to equity market risk and currency hedge risk; if currency movements or hedging costs diverge from expectations, performance may deviate from unhedged Japanese exposure. Liquidity and tracking error can also influence trading and returns.

History and purpose: DXJ was launched in the early 2010s to provide a vehicle for investors seeking exposure to Japanese equities with currency risk mitigated. It complements unhedged Japan funds and other hedged international strategies, offering an option for those prioritizing currency risk management in a Japan-focused equity allocation.