ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Alternatives Channel
      • Artificial Intelligence
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Education
      • ETF Investing
      • ETF Strategist
      • Faith-Based Investing
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Invest Beyond Cash
      • Leveraged & Inverse
      • Modern Alpha
      • Portfolio Strategies
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Gold/Silver/Critical Materials
        • Crypytocurrency
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
    • Market Outlook
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Database Categories
    • Indexes
    • Scenario Analysis
    • Watchlists
    • Head-To-Head ETF Comparison Tool
    • Mutual Fund To ETF Converter
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • Gaining Perspective Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Modern Alpha Channel
  2. Inflation Predictions Help Japan ETFs in 2022
Modern Alpha Channel
Share

Inflation Predictions Help Japan ETFs in 2022

Tom LydonJan 10, 2022
2022-01-10

Inflation isn’t a topic confined to 2021. It’s front and center to start 2022 and could remain that way for several months. Perhaps longer. That could be enough to compel some investors to look to markets outside the U.S.

One potential and perhaps obvious beneficiary of U.S. inflation, which is all but certainly prompting the Federal Reserve to embark upon interest rate tightening, is Japan. Higher interest rates here could boost the already-strong dollar, bringing a favorable climate for Japanese exporters in one of their marquee markets.

As WisdomTree head of equity strategy Jeff Weniger and research associate Matt Wagner note, the Bank of Japan has long been one of the most accommodative central banks in the world, but inflation is mostly benign in the world’s third-largest economy.

“While many observers point to twin stimulus packages as fuel for U.S. inflation, there is not much concern in Japanese policy circles that consumer price inflation will run away in response to Tokyo’s new ¥40 trillion ($350billion) transfer payment package,” say the WisdomTree duo. “That initiative is one of the first orders of business of new prime minister Fumio Kishida, who wants to put cash directly into the hands of families with children. Tax breaks for businesses that raise wages are also in tow.”

Potentially adding to the allure of Japanese equities and the related exchange traded funds this year are the diverging paths of the Fed and the Bank of Japan. While it’s almost a lock that the Fed will hike rates multiple times, it’s a foregone conclusion that its Japanese counterpart will do no such thing.

“The dollar is rallying against the yen because the market is getting in front of a scenario that has the Fed tightening monetary policy more aggressively than previously expected—with hardly anyone anticipating anything other than subzero policy rates out of the Bank of Japan in 2022,” add Weniger and Wagner.

Japanese stocks and ETFs also matter today because that’s a value market, while the S&P 500 is richly valued.

“Because Japan’s stock market skews more heavily to value, it had a better go of it than domestic growth stocks,” notes the WisdomTree team. “Additionally, the real boost to returns came to investors who hedged the yen, a currency that fell out of bed as investors exited ‘risk-off’ positions.”

WisdomTree’s Japan ETF suite includes the WisdomTree Japan Hedged Equity Fund (DXJ B-), the WisdomTree Japan Hedged SmallCap Equity Fund (DXJS B-) (the small-cap relative to DXJ), and the WisdomTree Japan SmallCap Dividend Fund (DFJ C+).

For more news, information, and strategy, visit the Modern Alpha Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2025 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X