Alternative Investments: Japanese Economic Growth Surprises to the Upside – ETFs to Pick

December 12, 2019 | Alternative Investments, News
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Japanese economic growth during the third quarter of 2019 surpassed both preliminary and market forecasts.

Japan’s GDP growth during the third quarter of 2019 came in at an annualized 1.8%. This rate was much higher than the preliminary forecast of 0.2% annualized. It also breezed past analysts’ estimates of 0.7% growth. Moreover, it was the economy’s fourth consecutive quarter of positive growth. Therefore, in view of improving prospects, investors shouls consider investing in Japan via Japan-focused ETFs.

However, under the hood, the headline figure needs some perspective.

“The main reason for the upward revision was that non-residential investment jumped by 1.8 percent on-quarter instead of the preliminary estimate of 0.9 percent,”said Marcel Thieliant, senior Japan economist at Capital Economics.

Another reason could be some pre-emptive purchases before a sales tax hike scheduled for October. Therefore, the effect of this front-loading could correct in Q4.

Further, data for October are already showing below-expectation household expenditure and retail sales.

Japan’s economic policy stimulus

Nevertheless, economic growth continues to be top-of-mind for Japan’s leadership. Therefore, earlier this month, Japan’s Prime Minister Shinzo Abe said that his government would launch an economic stimulus package worth about 13 trillion yen ($119bn) in fiscal spending.

Therefore, the outlook for Japan’s economic growth over the near future appears to be optimistic. How can you take advantage as an investor?

Undoubtedly, the best way is to invest in a Japan-focused ETF.

Accordingly, here is a list of Japanese ETFs courtesy ETFdb.com:

Symbol ETF Name Total Assets ($MM) YTD Gain Expense Ratio
EWJ iShares MSCI Japan ETF $14,658.30 20.02% 0.47%
BBJP JPMorgan BetaBuilders Japan ETF $4,573.47 19.55% 0.19%
DXJ WisdomTree Japan Hedged Equity Fund $2,647.33 20.09% 0.48%
DFJ WisdomTree Japan SmallCap Dividend $471.35 18.61% 0.58%
IVLU iShares Edge MSCI Intl Value Factor ETF $394.56 13.27% 0.30%
HEWJ iShares Currency Hedged MSCI Japan ETF $381.70 21.25% 0.48%
DBJP Xtrackers MSCI Japan Currency-Hedged Equity Fund $308.52 21.26% 0.45%
FLJP Franklin FTSE Japan ETF $223.84 19.51% 0.09%

[Related Story:  Japan’s Mammoth Pension Fund Will No Longer Lend Shares to Short Sellers]

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