4 Small-Cap ETFs For A Bumpy Japan Ride

iShares MSCI Japan Small-Cap ETF ((SCJ - ETF report))

This fund follows the MSCI Japan Small Cap Index and holds 798 stocks in its basket. It is widely spread out across components with none holding more than 0.86% of assets. However, about one-fourth of the portfolio is allotted to industrials, closely followed by financials (18.7%) and consumer discretionary (18.2%). The fund has managed AUM of $339 million whiles sees lower average daily volume of around 38,000 shares. Expense ratio came in at 0.48%. The fund has added 1.7% over the past three months and has a Zacks ETF Rank of 2 with a Medium risk outlook.

SPDR Russell/Nomura Small Cap Japan ETF ((JSC - ETF report))

This is the illiquid and unpopular ETF in the Japanese space with AUM of $66.3 million and average daily volume of just 3,000 shares per day. It tracks the Russell/Nomura Japan Small Cap Index, charging investors 40 bps in annual fees. In total, the fund holds well-diversified 692 securities in its basket with none accounting for more than 0.61% of assets. Here again, industrials make up for the top sector at 26.1%, closely followed by consumer discretionary (21.3%). The product is up 2.6% over the trailing three-month period and has a Zacks ETF Rank of 2 with a Medium risk outlook (read: 4 Strong Reasons to Buy Japan ETFs Now).

WisdomTree Japan Hedged SmallCap Equity Fund ((DXJS - ETF report))

DXJS offers exposure to the Japanese small cap stocks while at the same time provides hedge against any fall in the Japanese yen. This is easily done by tracking the WisdomTree Japan Hedged SmallCap Equity Index. The fund has accumulated $207 million in its asset base and charges 58 bps in fees per year from investors. Volume is moderate as it exchanges 61,000 shares in hand per day on average. The product holds 619 stocks in its basket with none accounting for more than 0.94% of assets. Industrials and consumer discretionary and industrials take the top two spots with at least 24% share each, while materials, finance and information technology round off the top five. The ETF gained 6.7% in the same period (see: all Developed Asia-Pacific ETFs here).

Bottom Line

These small cap Japan ETFs hit a new 52-week high last week and are clearly outpacing the broad fund (EWJ - ;ETF report). Given the China turmoil and global growth concerns, these funds seem safer choices to play the recovering Japanese economy.

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