What does currency hedging mean in the context of these ETFs?

Currency hedging is a strategy designed to reduce the impact of fluctuations in exchange rates between the investment's home currency and the asset's base currency. For Japanese equities, this means the fund aims to neutralise the effect of movements in the Japanese Yen against the investor's home currency. DXJ applies this hedge, whereas EWJ remains unhedged, meaning its returns are directly influenced by Yen valuation changes relative to the investor's base currency.

How do dividend yields differ between DXJ and EWJ?

Dividend yield represents the annual income a fund pays out relative to its share price. EWJ offers a higher yield of 3.62%, reflecting the income potential from its unhedged portfolio of Japanese stocks. DXJ has a lower yield of 0.93%, which can be attributed to the costs and mechanisms involved in its currency hedging strategy. Investors should understand that yield is not the sole factor in total return, especially when hedging is applied.

What is the significance of the expense ratio in ETFs?

The expense ratio is an annual fee charged by the fund manager for managing the portfolio, expressed as a percentage of the fund's assets. It directly reduces the net return to the investor over time. A higher expense ratio means more costs deducted from your investment value annually. While the difference between 0.48% and 0.49% appears small, these costs compound over long investment horizons, potentially leading to noticeable differences in final wealth accumulation compared to lower-cost alternatives.

Why is net assets a factor to consider when comparing these two funds?

Net assets indicate the total market value of all securities held by the fund, serving as a proxy for its size and potential liquidity. EWJ, with $23.1 billion in net assets, generally offers very high liquidity and tight bid-ask spreads due to its massive scale. DXJ holds $7.0 billion, which is also substantial and ensures good tradability. Larger funds can sometimes track indices more efficiently and attract more institutional participation, potentially lowering tracking error.

How does the inception date of a fund impact its historical data?

The inception date marks when a fund was first established, determining the length of its operational history and available performance data. EWJ, launched in March 1996, offers a significantly longer track record of nearly 30 years, providing more historical context for its performance through various market cycles. DXJ, founded in June 2006, has a shorter history, which may limit the amount of long-term data available for assessing its behaviour during specific economic conditions.

Which fund is typically associated with income generation?

EWJ is generally associated with investors seeking higher income generation, primarily due to its dividend yield of 3.62%. This yield is derived from the dividends paid by the underlying Japanese companies held in the unhedged portfolio. Conversely, DXJ, with a yield of 0.93%, is less focused on income distribution. The hedging process in DXJ can reduce the net income available for distribution compared to its unhedged counterparts, making it a distinct choice for different income priorities.

Which fund is typically associated with currency risk mitigation?

DXJ is specifically designed for investors looking to mitigate the impact of Japanese Yen fluctuations on their equity returns. By hedging the currency exposure, it aims to isolate the performance of the Japanese stock market from the exchange rate movements between the Yen and the investor's home currency. EWJ, on the other hand, remains fully unhedged, meaning its total return is a combination of equity market performance and currency movements, exposing investors to both.

What types of companies are held in these ETFs?

Both funds track exposures to the Japanese equity market, typically encompassing large and mid-capitalisation companies listed on Tokyo exchanges. While specific top holdings and sector weightings are currently not available for direct comparison in the provided data, the underlying indices generally include major Japanese multinational corporations across sectors like technology, automotive, and financial services. The composition differs slightly due to the hedging overlay in DXJ versus the direct stock holdings in EWJ.

How similar are the top holdings of DXJ and EWJ?

According to the available data, there are none among the listed top holdings that are shared between DXJ and EWJ. This lack of overlap in the reported top ten positions suggests different selection mechanisms or weighting adjustments. DXJ's portfolio may be adjusted by the hedging process or specific index rules that differ from the standard MSCI index tracked by EWJ, leading to distinct concentration in different stocks at any given time.

How does liquidity compare between DXJ and EWJ?

Liquidity refers to how easily an investor can buy or sell shares without significantly affecting the price. EWJ's huge net assets of $23.1 billion guarantee exceptional market liquidity, typically resulting in very tight bid-ask spreads and high daily trading volumes. DXJ's substantial $7.0 billion net assets also ensure high liquidity, making it easily tradeable. However, EWJ's larger asset base might offer slightly more favourable execution conditions for very large institutional orders.

What factors should an investor monitor when comparing fees?

Beyond the headline expense ratios of 0.48% for DXJ and 0.49% for EWJ, investors should consider tracking error and potential tax implications from distributions. The expense ratio difference is just 0.01 percentage points, which is minimal. Therefore, the choice between these two funds would likely depend more on your preference for currency hedging versus income yield rather than cost savings from the expense ratio itself. Always review detailed fund documentation for tax specifics.

What is the purpose of comparing DXJ and EWJ on this page?

The purpose is to provide educational insight into how currency hedging affects fund characteristics like dividend yields and expense ratios. By comparing DXJ and EWJ, readers can understand the trade-offs between mitigating currency risk and capturing higher income or direct market exposure. This comparison helps investors grasp the mechanics of Japanese equity ETFs, highlighting how different strategies (hedged vs unhedged) lead to different return profiles and cost structures.

DXJ vs EWJ

Two funds, one decision: we compare cost, performance and what each ETF actually holds in October 2026.

Compare WisdomTree Japan Hedged Equity ETF (DXJ) and iShares MSCI Japan ETF (EWJ). Both track Japan Stock markets, but DXJ applies currency hedging while EWJ remains unhedged. Review their fees (0.48% vs 0.49%), assets ($7.0bn vs $23.1bn), dividend yields (0.93% vs 3.62%), holdings and market exposure to distinguish their approaches. Educational content, not financial advice.

Compare WisdomTree Japan Hedged Equity ETF (DXJ) and iShares MSCI Japan ETF (EWJ). Both track Japan Stock markets, but DXJ applies currency hedging while EWJ remains unhedged. Review their fees (0.48%...

Fund Snapshot

Key Fund Metrics

DXJ

Metric

EWJ

0.48%

Expense Ratio

0.49%

0.93%

Dividend Yield

3.62%

$7.00B

Net Assets

$23.15B

433

Holdings

174

Jun 16, 2006

Inception Date

Mar 12, 1996

–

Index Tracked

–

Japan Stock

Fund Category

Japan Stock

DXJ costs about $1.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

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Compare BBJP and EWJ on expense ratio, yield, assets and tracking. BBJP: 0.19%, 4.48%. EWJ: 0.49%, 3.62%. Holdings data not available for either fund.

Investment Analysis

DXJ

Pros

Provides currency hedging to mitigate JPY depreciation risk.
Substantial $7.0 billion net assets ensure high liquidity for trading.
Long track record since 2006 demonstrates established operational history.

Considerations

Relatively high 0.48% expense ratio reduces net investor returns.
Low 0.93% dividend yield offers limited income generation potential.
Top holdings and sector weightings are not currently available for analysis.

EWJ

Pros

Huge $23.1 billion net assets guarantee exceptional market liquidity.
High 3.62% dividend yield provides significant income potential for investors.
Very long history since 1996 offers robust tracking record.

Considerations

Unhedged exposure leaves returns vulnerable to JPY currency fluctuations.
Near-identical 0.49% expense ratio offers minimal cost advantage over peers.
Top holdings and sector weightings are not currently available for review.

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About DXJ and EWJ

DXJ (DXJ)

The WisdomTree Japan Hedged Equity ETF (DXJ) is an exchange-traded fund designed to offer investors exposure to Japanese equities while aiming to mitigate currency risk from the Japanese Yen. By hedging against specific currencies, typically the US Dollar, the fund seeks to isolate the performance of the underlying Japanese stock market from exchange rate fluctuations. With a substantial net asset base of approximately USD 7.00 billion and a diversified portfolio of 433 holdings, this fund provides broad access to the Japanese economy. The expense ratio stands at 0.48%, reflecting the costs associated with active currency management and fund operation. While it currently offers a dividend yield of 0.93%, income levels can vary. Investors should remember that while currency hedging aims to reduce volatility, it does not eliminate the risks associated with stock market movements or interest rate changes. This fund is suitable for those seeking Japanese equity exposure with a specific focus on currency protection.

EWJ (EWJ)

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DXJ vs EWJ

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Investment Analysis

DXJ

Pros

Considerations

EWJ

Pros

Considerations

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Frequently asked questions

Fund Snapshot

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