Podcasts & Videos

Japan and Abenomics

August 12, 2014
Japan has been underperforming for the first half of 2014. So, why are we still bullish on it? Find out in our latest Japan podcast.

Past performance is not indicative of future results. You cannot invest directly in an Index.

Dividends are not guaranteed and a company's future abilities to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.

Hedge: Apply strategies meant to mitigate the impact of currency movements on equity returns.

Deflation: The opposite of inflation, characterized by falling price levels.

Abenomics: Series of policies enacted after the election of Japanese Prime Minister Shinzo Abe on December 16, 2012 aimed at stimulating Japan's economic growth.

Japan balance sheet expansion source: Bank of Japan. "Introduction of the 'Quantitative and Qualitative Monetary Easing'." April 4, 2013.

"ETFs": Exchange-traded funds

Consumption tax: Tax applied to spending on goods and services.

Japan real estate investment trusts (J-REITs): Investment structure containing a basket of different exposures to real estate, be it directly in properties or in mortgages traded on the Tokyo Stock Exchange. Returns predominantly relate to changes in property values and income from rental payments.

Risk premium: Equity investments are not risk free, but it is thought that investors buy stocks because the returns they expect are high enough to allow them to take the risk.

Buyback: When a company uses its own cash to purchase its own outstanding shares; may positively impact the share price.

JPX-Nikkei Index 400: Index of Japanese equity performance focused on constituents that are improving their profitability and corporate governance. Companies listed on the Tokyo Stock Exchange are screened for these criteria annually and the top 400 qualify as constituents.

Return on Equity (ROE): Measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

DXJ – WisdomTree Japan Hedged Equity Fund

Rebalance: An index is created by applying a certain set of selection and weighting rules at a certain frequency. WisdomTree rebalances, or re-applies its rules based selection and weighting process on an annual basis.

DXJS – WisdomTree Japan Hedged SmallCap Equity Fund

WisdomTree Japan sector funds: WisdomTree Japan Hedged Financials Fund (DXJF), WisdomTree Japan Hedged Real Estate Fund (DXJR), WisdomTree Japan Hedged Capital Goods Fund (DXJC), WisdomTree Japan Hedged Health Care Fund (DXJH), WisdomTree Japan Hedged Tech, Media and Telecom Fund (DXJT)

MSCI Japan Index: A market cap-weighted subset of the MSCI EAFE Index that measures the performance of the Japanese equity market.

U.S. treasury growth expectations from Bloomberg, looking from 12/31/13 to 7/21/14.

Value: Characterized by lower price levels relative to fundamentals, such as earnings or dividends. Prices are lower because investors are less certain of the performance of these fundamentals in the future.

Price-to-earnings (P/E) ratio: Share price divided by earnings per share. Lower numbers indicate an ability to access greater amounts of earnings per dollar invested.

U.S. and Europe P/E ratio data from Bloomberg, with data as of 7/18/14.

Christopher Gannatti, CFA
Head of Research, Europe
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Jeremy Schwartz, CFA
Global Head of Research
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