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Best Japan ETF UK – Compare Top ETFs 2021

Exchange-traded funds (ETFs) have become one of the popular trading means in exchanges recently. They are collections of investment funds and products such as bonds, commodities, shares, and others. Having one of the top global strong economies, Japan possesses great ETFs that you can trade on.

This article comes as your guide as we review the best Japan ETFs U.K. and the top brokerages you can use to invest in them.

Key points on Chinese ETFs

  • Japan ETFs group together assets like Japanese assets like stocks and bonds to provide exposure to the market with less volatility than singular assets.
  • Some of the best Chinese ETFs are the iShares MSCI Japan ETF (EWJ), the iShares Currency Hedged MSCI Japan ETF (HEWJ), and the WisdomTree Japan Hedged Equity (DXJ).
  • If you want to invest in Canadian TFs, you can do so without paying any commission using our recommended ETF broker, eToro.

Best Japan ETF 2021 List

Here are the best Japan ETFs that you can trade on in the U.K.

  • iShares MSCI Japan ETF (EWJ)
  • iShares Currency Hedged MSCI Japan ETF (HEWJ)
  • WisdomTree Japan Hedged Equity (DXJ)
  • HSBC MSCI AC Far East ex-Japan UCITS ETF (HMAF)
  • Vanguard FTSE Japan UCITS ETF (VJPN)

You can invest in these top Japan ETFs and many other funds with 0% commission on eToro, our recommended ETF broker.

Best Japan ETFs Reviewed

Now let’s take a closer look at the best Japanese ETFs to invest in.

1. iShares MSCI Japan (EWJ)

iShares MSCI Japan has the objective of tracking an index composed of investment results of Japanese equities. Its inception was in March 1996 and has net assets of funds of about $12,898,183,105 as of November 8, 2021.

EWJ boasts of sustainability characteristics that can assist investors in inputting non-financial strategies in processing their investment. This means that investors engage in fund evaluations that depend on certain factors to make their decisions. Some of the factors include governance (ESG), environmental and social opportunities, or risks.

ishares japan etf

The three top holdings of EWJ are Toyota Motor Corp, Sony Group Corp, and Keyence Corp. At the time of writing, iShares MSCI Japan ETF (EWJ) price stands at $69.63.

The performance overview of iShares MSCI Japan ETF (EWJ) for the past year is 19.22%. Furthermore, the ETF chart indicates its downward move during the global pandemic of 2020.

Functions of EWJ:

  • It publicizes Japanese large and medium-sized firms.
  • Forms a means of displaying views within the Japanese market.
  • Makes the Japanese stock market quite accessible within a single trade.

2. iShares Currency Hedged MSCI Japan ETF (HEWJ)

iShares Currency Hedged MSCI Japan ETF was incepted in January 2014. Its operation inculcates a USD index that combines large and mid-cap Japanese organizations. This helps reduce influences from the constant swing in the values of USD and the Japanese yen. In addition, HEWJ engages in tracking funds to the index.

The exchange-traded fund offers more significant exposure to different Japanese equities. Thus, investors get a wide range of products for their investments.

ishares currency hedged japan etf

The strategy from HEWJ is through currency-hedging that eliminates exposure to the fluctuation in the Yen value. Moreover, it uses the blended approach that combines investment in stocks’ growth and value for large-cap equities.

By using its assets up to 80%, this iShares Japan ETF invests within component securities as well as the underlying index instruments. Also, it engages in other investments with economic attributes similar to the underlying index’s component security.

HEWJ top three holdings are Toyota Motor Corp, Sony Group Corp, and Keyence Corp. The performance overview for this Japan ETF is 28.24%. It plummeted during the recent pandemic. The current price of the EFT at the period of writing is $40.46.

Functions of HEWJ:

  • Through the allocation within Japanese equities, the funds aim at reducing the influence of the Yen relating to the USD,
  • Addressing issues of currency risk while ensuring unwavering equity exposure via the combination of HEWJ and EWJ (the unhedged version).
  • Acquisition of larger exposure to diverse Japanese firms that could be profitable through Japanese stimulus policies.

3. WisdomTree Japan Hedged Equity (DXJ)

WisdomTree Japan Hedged Equity Fund was incepted in June 2006. It operates intending to publicize the Japanese equity market while shielding the swing between the Yen and USD. DXJ has the functionality of tracking.

The three top holdings of this Japan ETF are Toyota Motor Corp, Mitsubishi UFJ Financial Group Inc., and Sumitomo Mitsui Financial Group Inc. Through the use of a currency hedging approach; the fund dismounts the effects of changes in the value of the Japanese yen.

wisdomtree japan etf

Thus, investors get the attraction in the Japanese equity market as they expect the Yen’s weakness in relation to the United States dollar. Also, the ETF has more focus on exporters and hence displays exposure firms in Japan that pay dividends.

The industrial sector has the greatest exposure to DXJ. The next follow-up is the consumer discretion as well as the financials. The funds combine growth stocks and the value of several large-cap organizations.

DXJ has its performance overview for the past one year at 32.72%. Moreover, the impact of the last global pandemic in 2020 had a drastic negative effect on DXJ. From the chart indicates, the ETF had its lowest dip in March 2020. At the time of writing this article, the price of WisdomTree Japan Hedged Equity Fund is $63.80.

Functions of DXJ:

  • The Currency Hedge curbs every fluctuation exposure of the Japanese yen.
  • Provides the means of maintaining the equity exposure of Japan as it annuals the currency fluctuation between the Japanese yen and the USD.
  • Through an exporter focus, it receives wider exposure of equity to companies that pay dividends in Japan.

4. HSBC MSCI AC Far East ex-Japan UCITS ETF

HSBC MSCI AC Far East ex Japan UCITS ETF takes its investments in stocks with a tilt on the Asia Pacific. It operates by reinvesting the funds’ dividends which gives rise to accumulating dividends for investors.

This is one of the Japan ETFs that doubles the underlying index’s performance through sampling technique. The technique deals with the purchase of most outstanding components of the underlying index to ensure repeated performance.

hsbc japan etf

The fund is incepted in September 2013 and has more than 468 million Euro assets in its management. The top three holdings of this Japan ETF are Taiwan Semiconductor Manufacturing Co Ltd. Tencent Holdings Ltd, and Alibaba Group Holding Ltd.

HSBC MSCI AC Far East ex Japan UCITS ETF performance overview for one year is -1.96%. The ETF’s chart shows a dip during the recent global pandemic. However, with the current trend, there’s more potential for up growth in the future. At the time of writing, the price of HSBC MSCI AC Far East ex Japan UCITS ETF is $57.20.

Functions of HSBC MSCI AC Far East ex Japan UCITS ETF:

  • The ETF tracks the broad equity markets of both developed and developing nations within the East Asia region.

5. Vanguard FTSE Japan UCITS ETF

The design of Vanguard FTSE Japan UCITS ETF is for tracking the performance of an index that combines both mid and large-cap firms in Japan. Its functionality is through the indexing investment approach that inculcates passive management for assets under it. This means that there’s the physical acquisition of the securities under the control of the main index for its tracking

Also, the Vanguard Japan ETF replicates the index through its complete investment of almost all its stock assets. The investment has nearly the same proportion in weight as the underlying index.

vanguard japan etf

Launched in May 2013, this ETF is among Japan ETFs list that has shown meteoric growth over the years. Its performance overview for one year is 11.33%. The price of the ETF at the period of writing is 36.42%.

The top three holdings of this Vanguard Japan ETF are Toyota Motor Corp, Sony Group Corp, and Keyence Corp.

Functions of Vanguard FTSE Japan UCITS ETF

  • The ETF tracks the index performance through indexing investment.
  • It replicates the index by investing all its assets.

Japan ETFs Explained

Japan ETFs are exchange-traded investment funds with the aim of tracking the performance of financial assets, instruments, or products in Japan equity market. The investment could be for a particular stock market, asset, index, or industry sector.

Just like mutual funds, EFTs are traded daily on the stock market. You can engage in trading by either buying or selling any products of your choice. Such involvement requires that you must have an online trading account with a good ETF brokerage. Also, trading on ETFs leaves the management of your funds solely to your broker.

There are several outstanding funds in the Japan ETFs list that allows you to invest in several assets through a single underlying index or stock. Some of them are Japan small cap ETF, mid cap ETF, and large cap ETF.

Are Japan ETFs a Good Investment?

Investing in Japan ETF is one of the ways to reduce the risk involved in some financial instruments. However, just like with European ETFs, Chinese ETFs and Canadian ETFs, Japan ETFs don’t completely eliminate investment risks. As they have low costs than the real funds under active management, ETFs are a more cost-effective and good investment, especially on long-term basics.

Here are some of the pros and cons of investing in Japan ETFs.

Pros

  • Allows investors to invest in the robust and huge Japanese economy and its country through a single investment product.
  • It builds the strength of the Japanese Yen against the United States dollars by trying to eliminate its fluctuations.
  • Creates the opportunities for investors to reap from stock repurchases and dividends of most Japanese companies.
  • The Japan ETFs are highly transparent that allows investors to visualize the components of their investments.

Cons

  • Japan ETFs have underperformance relative to the U.S. ones.
  • The fee structure for Japan ETFs limits its market variety and size. This invariable affects the choices of investors.
  • Failure in re-energizing of the Japanese economy due to some problems like prolonged deflation, huge debts and, an aging population are downsizing the move of ETFs in the country.

Where to buy Japan ETFs

There are several exchanges and brokerages within the industry that advertise for investors to buy ETFs and other assets through them. The primary factor that you must maintain while committing to any form of investment is to understand what you’re going into and the means to such investment. Hence, there’s every need to use a trusted and reputable platform for your investments.

eToro is one of the best brokerages that you can use to buy Japan ETFs as a U.K. resident. Among other reasons, the security and safety on the platform are top-notch. Moreover, eToro offers zero commission on trading ETFs and other assets for its users. Alternatively, you can stick to Libertex brokerage for your best Japan ETFs.

1. eToro – Invest in Japan ETFs with 0% Commission

eToroeToro is our best top broker for investing in Japan ETFs U.K. Since its launch in 2006, eToro has had a meteoric rise to the top within the brokerage and exchange industry.

The broker provides online services for different instruments and products like ETFs, stocks, CFDs, cryptocurrencies, indices, and others. Its operations are cut across several countries worldwide. The platform is highly reputable and trusted within the industry as it creates a safe environment for all its customers. eToro is under the strict regulation of some top-tier financial agencies – the FCA, FinCEN, ASIC, and CySEC, so it’s incredibly safe.

When it comes to fees, eToro is competitively very low with the industry. It offers zero commission on trading its diverse stocks and ETFs, plus there’s no deposit fee for users irrespective of your transfer method!

eToro’s CopyPortfolio is one of its unique and outstanding features for users. This creates the opportunity for customers on the platform to engage in copy trading. Through the CopyPortfolio you can mirror the trading patterns of some successful traders and receive more insights. Moreover, the feature serves as your guide in changing your trading schedules and strategies to correspond to the user’s trading pattern you intend to imitate. This with this amazing feature, newbies can easily improve their trading pattern, become more technical and advance their investments.

Trade the best European ETFs on eToro with 0% Commission

The platform is equipped with a demo account for beginners to train and learn how to buy EFTs and other instruments. It comes with a balance that synchronizes with real-time prices. Moreover, the interface on the platform is simple and user-friendly for newbies to easily navigate.

Furthermore, the broker includes some technical tools which for helpful in analysis for different financial instruments on the platform. The clients have access to a news feed, some charting tools, and comments or ideas from analysts over top-performing assets. Also, users are introduced to a social trading platform where they can interact and communicate with one another.

eToro Fees: 

Account Fee None
Deposit Fee None
Cost to Invest in ETFs 0% Commission
Pricing Structure 0% Commissions, low spreads

Pros

  • Zero-commission ETF trading
  • Access to 17 international exchanges
  • Regulated by the UK’s FCA and several other top-tier financial authorities
  • Trade forex, CFDs, and fractional shares with the click of a button
  • Manage your portfolio anywhere at any time with the eToro mobile app
  • One of the best FCA brokers
  • Wide range of asset classes and products
  • Supports paper trading

Cons

  • Only supports USD as its base fiat currency
  • $5 withdrawal fee and $10 inactivity fee after 12 months

68% of retail investor accounts lose money when trading CFDs with this provider.

2. Libertex – Trade ETF CFDs with Zero Spreads

libertexLibertex stands as your great choice to buy the best Japan ETFs in the U.K. with convenience. The intuitive nature of the platform makes it a user-friendly option for beginners.

Libertex offers its users trading opportunities in over 200 instruments across eight different markets. These financial markets are ETFs, Stocks, Cryptocurrencies, Metals, Indices Currency pairs, oil/gas, and agriculture. Everything on Libertex is traded as CFDs, but unlike most other CFD brokers it doesn’t charge spreads, instead just a small commission, so it’s very competitive in terms of fees.

Libertex ETFs CFDs

There are many deposit options available for you on the Libertex platform for funding your account once you’re done with the verification process. Some of the deposit methods that the broker supports are PayPal, Debit/Credit cards, Sofort, Bank transfers, P24, Skrill, Neteller, Trustly, Giropay, iDEAL, and Raid transfer. You will give instant confirmation by using all the deposit options except for bank transfers. The latter can take some hours or up to 5 days for its confirmation.

Libertex runs as a web trading platform. So, you won’t have to download it before accessing the broker. When you connect to a browser, you can easily log in to the platform to buy your best Japan ETFs. Also, you will have the opportunity of using some advanced and technical tools from both MetaTrader 5 (MT5) and MetaTrader 4 (MT4). Hence, you can easily improve your trading strategies and increase your profitability.

Libertex’s Transaction Fees

Fees & Spreads: 

Account Fee None
Deposit Fee None
Cost to Invest in ETF CFDs Zero Spreads, -0.0003% commission
Pricing Structure No bid-ask spreads, low commissions

Pros

  • Zero-spread ETF CFD trading
  • Access to CFDs covering 250+ markets
  • Regulated by CySEC
  • User-friendly mobile trading app
  • Wide range of payment methods including PayPal and credit/debit cards
  • One of the leading low-spread brokers across the board
  • Supports MT4 and MT5

Cons

  • Only supports CFD instruments
  • 10 EUR inactivity fee after 180 days

75.26% of retail investor accounts lose money when trading CFDs with this provider.

How to Invest in a Japan ETF on eToro

If you want to invest in the best Japan ETF but don’t know where to start, we’ll show you how to buy and sell the top Japanese ETFs from the comfort of your own home. 

Step 1 – Open an eToro Trading Account

First and foremost, you’ll need to head over to the eToro website and tap on the Join Now button. You’ll then be required to enter your details and choose a username and password. 

Open an account with eToro and invest with 0% commission

Step 2 – Verification

Secondly, in line with KYC regulations you’ll need to verify both your identity and address by uploading copies of your passport and a recent bank statement. 

eToro KYC process

The account verification process is as straightforward as the initial onboarding process itself. After you’ve successfully submitted your documents, the eToro team will notify you when your account is ready. 

Step 3 – Deposit Funds

Now you’re ready to fund your eToro trading account. Depositing funds into your account is quick and easy. There are multiple payment options at your disposal. Simply select your preferred payment method, enter the amount and choose the currency, and that’s it. 

Additionally, there are no deposit fees and all deposits made using e-wallets and credit/debit cards are processed instantly. 

Step 4 – Search for the Best Japanese ETF

If you’re looking for a specific Japan ETF you can find it using the search bar. Alternatively, you can click on the Discover tab from the left-hand side of the dashboard and browse through 256 ETFs.

search for japan etf on etoro

Step 5 – Buy Japanese ETFs with eToro

You can invest in the best Japan ETF with just $50. This is ideal for beginner ETF traders looking to build a diversified portfolio on a budget. Depending on your market speculations you’ll have the option to buy and sell ETFs. 

Once you’ve found the best Japanese ETF that fits your risk tolerance and time horizon, tap on the Trade button next to the relevant result. 

buy japan etf on etoro

68% of retail investor accounts lose money when trading CFDs with this provider.

This will open a trading window where you can specify the amount you want to invest, how much leverage you want to use. You’ll also be able to place Stop-Loss and Take-Profit orders to mitigate any potential losses. 

Finally, click on Open Trade to buy your chosen Japan ETFs instantly. You can then monitor and manage your ETF investments via the Portfolio tab. 

Conclusion

Exchange-traded funds (ETFs) are gaining popularity recently as a means of speculating on diverse financial instruments. Japan as one of the top growing economies offers you a wide and large stock market through investments in ETFs. So, you can conveniently invest in the best Japan ETFs by using eToro, the best brokerage for the management of your investment.

eToro allows users to trade on Japan ETFs and other financial assets at zero commission fee. Also, you can access outstanding tools that will improve your performance through the broker’s CopyPortfolio. Moreover, using eToro will enable you to engage in CFDs ETFs where you can only speculate on the value of the underlying assets.

eToro – Buy Japan ETFs with 0% Commission

eToro

68% of retail investor accounts lose money when trading CFDs with this provider.

Frequently Asked Questions on Japan ETFs

Does Japan have ETFs?

Does Vanguard have a Japan ETF?

What is the Nikkei ETF?

What are some of Japan ETFs?

What is the best Japan ETF?

About Alan Draper PRO INVESTOR

Alan is the Chief Editor of the Buyshares sites and is responsible for ensuring all the content on our site is accurate, relevant and helpful. He is an experienced editor who has worked for several leading online publications. Alan is also a writer and is an expert on the stock market.

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