Japan: Weekly ETF and CEF Performance

Japanese ETFs trading in the U.S. struggled last week, losing a combined average 0.9%. Bulls were sidelined in Tokyo with options expiration last Friday, and a wait-and-see approach ahead of the G7 meeting of finance ministers.

The Nikkei 225 closed last Friday at 17,363.95. It had rallied 1.5% to 17,743.76 last Monday, but gave it all back and then some.

There was a nice rally today to start the new week, as the Nikkei 225 rose 1.5% to 17,628.30. However, the N225 is still about 4% off its 52-week and multi-year high of 18,300.39 (intra-day; it closed at 18,215.35) set on Feb. 26. (See chart below: 4/13)

The 10 Japanese ETFs (including 2 CEFs) trading in the U.S. lost a combined average 0.9% last week, as mentioned above. They are still in positive territory, +1.9%, for the year. See the thumbnail chart image to the right (click to enlarge) for returns two weeks ago.

Here's their combined average return over the past several weeks:

03/30 - 04/05: +0.7%
03/23 - 03/30: -2.1%
03/16 - 03/23: 3.1%
03/09 - 03/16: -1.9%
03/02 - 03/09: +2.0%
02/23 - 03/02: -4.8%
02/16 - 02/23: +0.9%
02/09 - 02/16: +3.6%

See the chart below for more details.

Disclosure: The author does not own shares of any funds mentioned in this article.

Click to enlarge chart

Vanguard's Pacific Stock ETF (VPL) continues to prove the benefits of being diversified, given its additional exposure to Australia [for instance, iShares Australia (EWA) is up 17+% ytd], Hong Kong [(EWH) +4.4%)] and Singapore [(EWS) +16.3%]. It is the best performing Japan ETF year-to-date, up 5.2%.

iShares MSCI Japan Index (EWJ), the most actively traded country-based ETF, lost 1.2% last week but, is still up 2.1% on the year.

The Japan Smaller Cap Fund (JOF), a closed-end fund, was last week's biggest loser, -3.8%, and lags for the year, -5.1%. According to Morningstar.com, it was trading at a 7.3% premium as of last Friday's close.

The yen by the way, is trading at renewed all-time lows against the Euro and is about to hit 120 again against the dollar. The yen was basically a non-issue at the G7 meeting referenced above, which means yen weakness persists for the time being. This has the CurrencyShares Japanese Yen Trust (FXY) in a downward trend since peaking in early March. (See chart below)

For your reference, here's a list of the 10 funds:

iShares MSCI Japan Index (EWJ)
iShares S&P/TOPIX 150 (ITF)
Japan Equity Fund, Inc. (JEQ)
Japan Smaller Capitalization Fund, Inc. (JOF)
SPDR Russell/Nomura Prime Japan (JPP)
SPDR Russell/Nomura SmallCap Japan (JSC)
Vanguard Pacific Stock (VPL)
WisdomTree JP High-Yielding Equity (DNL)
WisdomTree JP SmallCap Dividend (DFJ)
WisdomTree JP Total Dividend (DXJ)