Surprising Results from Japan Small-Cap Fund

| About: SPDR Russell/Nomura (JSC)
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Few areas of world stock markets have received as much negative attention as export-dependent Japan. Some describe the country's prospects as deader than a rusty collection of doornails.

Indeed, the pricey yen makes it difficult for a cost-conscious world to import Japanese goods. What's more, consumption on Japan's homefront may be in worse shape than here in the U.S.

So you might be surprised to learn that a small-cap Japan ETF was the sole fund to meet the following criteria:

(1) 1-year rolling returns that are effectively flat or positive (-2% or better)
(2) 10 percentage points within striking range of a 52-week high, and a...
(3) Price/Sales below 1

Actually, it's not surprising to discover so few ETFs able to survive such a screen. The surprising part, if you will, is that the single fund to make the trip comes from the recession-ravaged "Land of the Rising Sun."

SPDR Russell/Nomura Small Cap Japan (NYSEARCA:JSC) is designed to track the total return of the float-adjusted Russell/Nomura Japan Small Cap Index -- a benchmark comprised of the smallest 15% of stocks in the Russell/Nomura Total Market Index. According to the State Street web site, the fund's largest 4 segment weightings include industrials (20%), consumer discretionary (20%), materials (15%) and financials (13%).

With so many folks focused on calendar year gains, it's intriguing to note that only a baker's dozen stock-based ETFs can boast a -2% 52-week return or better. More importantly, of those that are flat or positive after 1 year, how many of them are still priced at exceptional bargains?

For all the focus on price-to-earnings, sales numbers are far more difficult to manipulate by corporations; accounting gimmickry is much more challenging with sales than it is with so-called "earnings." It follows that value investors often chomp at the bit to get an index where the current price is effectively lower than the sales per outstanding shares.

(Although I had "Small Japan" on my Xmas wish list, it hit stop-loss parameters in January. Call it... an ETF that got away.)

Japan small etf jsc 2009

Full Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company may hold positions in the ETFs, mutual funds and/or index funds mentioned above.