Japan: Weekly ETF and CEF Performance

Japanese ETFs trading in the U.S. struggled last week, with no fund posting a gain and the group falling negative once again for the year.

The weak yen is to blame. In case you missed it, last Thursday the Nikkei 225 closed at 18,240, finally taking out its 2/26 high and going on to its best close in seven years.

However, the yen was last trading around 124 against the U.S. dollar, a 4.5-year low.

In early Monday trading in Tokyo, the N225 was down 0.3% to 18,138. Things don't look too bad down only this much after Friday's U.S. sell-off.

According to data from the Nikkei Shimbun, the N225 components have a price-to-book ratio of 2.07, ttm p/e of 20.76, f/p/e of 19.59 and a dividend yield of 1.08% (expected) and 1% ttm.

See the chart below of the N225 as of Friday's (6/22) close.

The 10 Japanese ETFs (including 2 CEFs) trading in the U.S. lost 1.6% (combined average) last week, and are now down 0.6% year-to-date.

Here's their combined average return over the past two months:

06/08 - 06/15: 0.0%
06/01 - 06/08: -0.6%
05/25 - 06/01: +2.9%
05/18 - 05/25: +0.3%
05/11 - 05/18: -3.4%
05/04 - 05/11: +0.4%
04/27 - 05/04: +0.8%
04/20 - 04/27: -1.7%

See the chart below for more details of last week's and ytd returns.

Click to enlarge chart

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

The SPDR Russell/Nomura SmallCap Japan (JSC) fund lost the least last week, -0.5%. There was likely some buy interest sparked from news Japan's national pension fund is planning to add small-cap equities to its portfolio using the Russell/Nomura Small Cap index as a benchmark.

Vanguard's Pacific Stock ETF (VPL) lost 1.2%, but continues to lead all Japan ETFs ytd (+5.4%).

iShares MSCI Japan Index (EWJ), the most actively traded country-based ETF, lost 1.4%, but is still in positive territory up 1.5% for the year.

Yen weakness persists against both the euro (all-time low) and U.S. dollar (~ 4.5 year low). In fact, the yen is trading at multi-year and some cases 10-year plus lows against a basket of major currencies.

See the chart below of the CurrencyShares Japanese Yen Trust (FXY) ETF, which was launched earlier this year.

For your reference, here's a list of the 10 funds surveyed in this weekly summary.

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)