A New Japan ETF On Dividend Growth Hits The Market

WisdomTree appears in no mood to get over the Japan investing spree. It has Japan Hedged Equity Fund (DXJ - ETF report) – a billion-dollar Japan ETF in its kitty. Apart from this, it operates WisdomTree Japan Hedged SmallCap Equity Fund (DXJS), Japan Hedged Dividend Growth Fund (JHDG) and several sector-specific Japan ETFs.

While WisdomTree’s currency-hedged ETF versions have made a killing thus far, the issuer is bolstering the pipeline of non-currency hedged Japan ETFs. In this pursuit, WishdomTree recently launched Japan Dividend Growth Fund (JDG). Let’s delve a little deeper (read: Four Reasons to Buy WisdomTree ETFs).

JDG in Focus

The new ETF follows the WisdomTree Japan Dividend Growth Index. The fund consists of about 217 companies. The stocks are screened on a combined basis of growth and quality factors in order to give a comprehensive approach to dividend investing.

Growth factors like long-term earnings growth expectations and quality factors like historical return on equity, and return on assets are the criteria looked upon while including stocks to build up the index. The stocks need to exhibit a higher earnings yield than dividend yield for an entry to the index.

Consumer discretionary rules the fund with over 20% exposure. Industrials (19.4%), Telecom (15.25%), IT (14.67%) and Consumer Staples (10.69%) also get double-digit weight each.  NTT DoCoMo Inc (5.8%), Nippon Telegraph & Telephone C (NTT) (5.4%) and Japan Tobacco (4.51%) round out the top three spots of the ETF. It charges 43 bps in fees.

How Does it Fit in a Portfolio?

International dividend investing has taken center stage lately on a flurry of monetary easing. This was truer in the case of Japan as the country enhanced its asset buying program to 80 trillion yen a year at October end at the previous rate of 60–70 trillion yen to boost a sagging economy. This makes the high-dividend Japanese investing an intriguing bet for yield-hungry investors as rates are at rock-bottom levels (read: Introductory Guide to Japan ETF Investing).

The country’s key stock index Nikkei hit 15-year highs this year. With Japanese consumer spending still remaining soft, we expect this gigantic stimulus measure to stay for some more time. This makes the launch well timed (read: Nikkei Hits fresh 15-Year High: 3 Japan ETFs to Buy).

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