One of the persistent themes in the first half of 2026 has been international exposure. With potentially overstretched valuations in U.S mega-cap names and higher-for-longer inflation devaluing the U.S. dollar, more investors have been looking overseas for a greater opportunity set. At a recent TMX VettaFi Midyear Market Outlook Symposium, Cinthia Murphy, Director of Research at VettaFi, sat down with Jeremy Schwartz, Global Chief Investment Officer at WisdomTree.
The firm was recently named ETF Provider of the Year by InvestmentNews, marking 20 years since the firm launched its first cohort of ETFs. Heading into the second half of 2026, international exposure was one of the investing themes discussed.
Key Takeaways:
- Japan is a high-conviction tactical play as global tech conglomerates build out its semiconductor supply chain to diversify away from Taiwan.
- The WisdomTree Japan Hedged Equity Fund (DXJ ) avoids currency drag by stripping out yen exposure, while the WisdomTree Japan Opportunities Fund (OPPJ ) offers broad sector exposure across tech, industrials, and financials.
- The newly introduced WisdomTree Asia Defense Fund (WDAF) excludes China to target rising military budgets in South Korea, India, and Japan, with South Korea anchoring over a third of the portfolio.
Re-Engineering Japan Exposure
Once the second largest economy in the world, Japan is now the fourth, but opportunities are abound in the land of the rising sun. The country remains one of Schwartz’s highest-conviction tactical ideas, but he emphasizes that unlocking its outperformance requires careful navigation of its macro currency dynamic. As Schwartz noted, Japan is positioned to inherit immense public and private capital expenditures as global tech syndicates seek structural alternatives to Taiwan.
“Where else is the next most likely place they are going to build the semiconductor supply chain? It’s in Japan,” Schwartz said, noting massive 15-year government semiconductor initiatives and localized infrastructure investments from tech conglomerates like SoftBank.
Historically, a weakening yen has eaten away at unhedged international equity returns. To address this, the WisdomTree Japan Hedged Equity Fund (DXJ ) has consistently outpaced broad market indices by stripping out yen exposure and thus, its impacts entirely.
Additionally, shifting policy stances from the Bank of Japan (BOJ) have opened the door for more flexible strategies. That said, Schwartz also cited the WisdomTree Japan Opportunities Fund (OPPJ ) that tracks the WisdomTree Japan Opportunities Index. In doing so, the fund offers a diversified basket that maintains wide sector exposure from industrials, tech, materials, and financials to offer a blend of growth as well as value.
The Rise of Regional Defense
Expanding on regional macroeconomic footprints, Schwartz detailed a profound shift toward defense spending across the Asian corridor. Following on the heels of a successful asset-gathering trajectory of their European defense strategy, WisdomTree introduced the WisdomTree Asia Defense Fund (WDAF).
Excluding China, the index captures the shifting geopolitical realities of nations like South Korea, India, and Japan as regional defense budgets increase in these countries. South Korea, in particular, anchors more than a third of the portfolio due to its advanced defense manufacturing capabilities.
Summarily, for investors re-evaluating their portfolios for the remainder of the year, Schwartz suggests that a strategic international sleeve shouldn’t simply be a generic, unmanaged bucket. A targeted 10% to 15% allocation to active structural plays like OPPJ allows portfolios to gain exposure to deep fundamental value, isolate secular AI hardware winners, and hedge against localized macro risks.
Click here to watch the full symposium.
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