Investors seeking to target investment opportunities in Asia’s largest developed market often look to Japanese ETFs. The prime of such ETFs to deliver broad exposure to U.S. investors first launched back in March 1996, and it still has the largest amount of assets under management of any ETF of its kind today. This fund is the so-called iShares MSCI Japan ETF (EWJ), which is managed by BlackRock Fund Advisors headquartered in San Francisco, California. There are some concerns with the Japanese market, namely that it is stuck in a state of deflation with no seeming escape because it has one of the oldest populations in the world. Despite this, the Japanese market still has interesting possibilities for equity rallies. (See more: 2 ETFs for a Potential Japanese Rally (EWJ,DXJ).)
The EWJ ETF attempts to track and match returns for its holders corresponding to the Japanese market’s performance on the MSCI Japan Index. The fund attempts to do so by distributing its assets into representative samples of different sectors on this index through a sampling technique weighted towards market cap. As of Sept. 28, 2016, the fund comprises a total asset volume of about $14.19 billion. The market-cap focus is on mid- and large-sized corporations. The ETF has been active for more than 20 years now. Below, we take a detailed look at the average annual performance figures.
Average Annual Performance Since EWJ’s Inception
As of Aug. 31, 2016, according to BlackRock, the average annual total return (NAV) of the EWJ ETF since its inception in March 1996 is 0.05%. Below, we take a look at the 10-years, 5-years and 3-years average annual performances (representing changes to EWJ’s NAV) as of Aug. 31, 2016:
10-years average annual total return (NAV): 0.26%
5-years average annual total return (NAV): 6.20%
3-years average annual total return (NAV): 5.18%
The YTD NAV total return of EWJ ETF, as of Sept. 29, 2016, is positive at 3.40%.
The Bottom Line
This is a highly liquid ETF option for investors who intend to increase broad exposure to the Japanese stock market. However, as would be advisable with any such fund, prospective investors should perform due diligence on the funds projected returns as well as its risk to ensure it falls within acceptable boundaries before making a final investment decision.