Japan: Weekly ETF and CEF Performance

Japanese ETFs trading in the U.S. all posted gains last week, but the two closed-end funds both closed lower. A slight rise in the yen against the dollar was helpful, as the Nikkei ended mostly flat. Year-to-date, Japan is trailing regional and global benchmarks by a wide margin.

Although the yen strengthened somewhat last week -- overall by less than 1% -- it is still above 123 per dollar, meaning the yen is still considered "weak." See the chart at the end of the CurrencyShares Japanese Yen Trust (FXY) ETF, which was launched earlier this year.

As of Friday, the Nikkei 225 was about 100 points (~0.5%) off its June 21 seven-year high close of 18,240.

However, in early Monday trading in Tokyo, the N225 was down 0.3% to 18,085, on mostly in-line results from the Bank of Japan's tankan (quarterly business confidence survey).

According to data from the Nikkei Shimbun, as of Friday's (6/29) close, the N225 components have a price-to-book ratio of 2.06, ttm p/e of 20.67, f/p/e of 19.49 and a dividend yield of 1.08% (expected) and 1% ttm.

See the chart below of the N225 as of Friday's close.

The 10 Japanese ETFs (including 2 CEFs) trading in the U.S. gained 0.7% (combined average) last week, and edged back into positive territory at +0.1% year-to-date.

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

06/15 - 06/22: -1.6%
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%

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.

All three of WisdomTree's (WSDT.PK) funds were among the top-3 performers last week, led by the High-Yielding Equity Fund (DNL) +1.7% (-0.8% ytd), followed by the SmallCap Dividend Fund (DFJ) +1.6% (+1.4% ytd) and the Total Dividend Fund (DXJ) +1.5% (+0.9% ytd).

Vanguard's Pacific Stock ETF (VPL) gained 0.6% and continues to lead all Japan ETFs ytd (+6.1%). It had a nice week considering the declines in the iShares Australia (EWA) and Singapore (EWS) funds and only a small gain by the iShares Hong Kong (EWH) fund.

iShares MSCI Japan Index (EWJ), the most actively traded country-based ETF, also rose 0.6%, and is up 2.1% for the year.

The two closed end funds, Japan Equity Fund, Inc. (JEQ) and Japan Smaller Capitalization Fund, Inc. (JOF) both lost 1.1%, leaving the former down 0.5% for the year and the latter down 12%.

CurrencyShares Japanese Yen Trust (FXY) ETF year-to-date chart:

Further reading: U.S., Japan Had Most Stable P/Es Over Last Year • Nikkei's March Toward 20,000 Milestone Driven By 'Old Economy' • Yen Gains Against Dollar on Minister's Warning, But Carry Trade Intact

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)