Looking to diversify into Japan’s resurging economy?
With its favorable currency environment, improving corporate governance, and renewed global interest, Japan is back on the radar. If you want exposure to this market, the EWJ ETF is one of the most convenient ways to do it.
In this post, we’ll break down what EWJ is, what it holds, its advantages and risks, and how it compares to similar ETFs.
🧾 What is EWJ ETF?
EWJ (iShares MSCI Japan ETF) is a U.S.-listed ETF managed by BlackRock's iShares, designed to give investors access to the Japanese equity market. It tracks the MSCI Japan Index, covering large- and mid-cap Japanese companies.
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Issuer: BlackRock (iShares)
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Inception Date: 1996
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Expense Ratio: 0.50%
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Index Tracked: MSCI Japan Index
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Holdings: Around 230 companies
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Dividend Yield: ~1.5–2%
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Dividend Schedule: Semi-annually or quarterly (may vary)
🏯 Top 10 Holdings
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Toyota Motor
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Sony Group
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Mitsubishi UFJ Financial Group
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Keyence Corp
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Tokyo Electron
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Shin-Etsu Chemical
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Recruit Holdings
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Nintendo
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SoftBank Group
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Hitachi Ltd
→ This ETF includes Japan’s leading firms in automotive, electronics, banking, semiconductors, and industrial sectors.
📊 Sector Allocation
| Sector | Approx. Weight (%) |
|---|---|
| Industrials | ~23% |
| Consumer Goods | ~20% |
| Information Tech | ~14% |
| Financials | ~12% |
| Healthcare | ~9% |
| Materials | ~8% |
| Communication | ~5% |
→ It’s heavily tilted toward cyclical and export-driven sectors.
✅ Advantages of EWJ ETF
1. Effortless Exposure to Japan
EWJ gives broad exposure to Japan’s top companies without needing to invest directly in Japanese markets.
2. Potential Yen Tailwinds
Because EWJ is traded in USD, a weaker yen may benefit export-heavy Japanese companies, enhancing performance.
3. Pro-Business Reforms in Japan
Japan is actively pushing corporate reforms, promoting share buybacks, better governance, and encouraging foreign investment.
❌ Disadvantages of EWJ ETF
1. Relatively High Expense Ratio
With a 0.50% fee, EWJ is pricier than many other developed market ETFs.
2. Low Dividend Yield
Japanese companies tend to reinvest earnings more than return them via dividends, so income investors may look elsewhere.
3. Currency Risk
Since EWJ is unhedged, its USD returns are directly influenced by JPY/USD exchange rate fluctuations.
💡 Who Should Consider EWJ?
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📌 Investors seeking diversified exposure to Japan’s economy
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📌 Those bullish on Japanese exports, autos, or semiconductors
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📌 Anyone building a broader Asia or global equity portfolio
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📌 Investors betting on yen weakness or structural reform in Japan
🔍 EWJ vs JPXN vs DXJ
| Feature | EWJ | JPXN | DXJ |
|---|---|---|---|
| Issuer | iShares | JPMorgan | WisdomTree |
| Expense Ratio | 0.50% | 0.19% | 0.48% |
| Currency Hedge | No | No | Yes (hedged to USD) |
| Index | MSCI Japan | JPX-Nikkei 400 | WisdomTree Japan Equity |
| Focus | Broad Japan | Quality + Yield | Exporters + Hedging |
→ Choose EWJ for classic, unhedged market exposure.
→ DXJ if you want protection from yen volatility.
→ JPXN for a cost-effective, quality-focused alternative.
📌 Final Thoughts
EWJ is a simple, effective way to invest in the Japanese stock market.
Whether you’re adding global exposure or looking for a yen play, EWJ provides access to Japan’s most influential companies in a single fund.
This post is not a buy or sell recommendation, but an introduction to the ETF.
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