Japan ETF Trades Rear Up

Japanese stocks were a money sink for so long that a lot of people gave up on them. However, what went down usually comes up again and brave souls are once again buying Japanese equities—or at least dipping in a toe by using exchange traded funds.

Global equity long/short hedge funds appear to own very little by way of Japanese stocks but people talk of trading Japan ETFs.

A widely used vehicle for this purpose is the iShares MSCI Japan Index. A new ETF –   just being launched – may also end up as a tool for hedge funds interested in making a macro bet on Japanese stocks. This is Maxis Nikkei 225 Index ETF, which tracks the 225 stocks traded on the first section of the Tokyo Stock Exchange.

There are Japan specialist hedge fund managers but probably fewer than in the past. Not many survive in the tough market. The iShares MSCI Japan Index went down 16.4% over the last five years and the economy has been stagnant – with cyclical ups and downs – since the 1990s. Even 2010, a year of strong growth in Japan, ended with a slump.

 

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