Best Japan ETFs to Buy in 2023 with Fees and Performance Details

Discover Japan ETFs with the lowest fees, strongest 1-year returns, and highest liquidity for 2023.

Investing in Japan-focused exchange-traded funds (ETFs) offers a strategic way to tap into the growth of the world’s third-largest economy by GDP, according to the latest World Bank data from 2021.

Although Japan’s economy faced setbacks during the pandemic, it is rebounding with a 2.7% annualized growth rate in Q1 2023, fueled by rising domestic consumption. Despite inflationary pressures, the International Monetary Fund projects a 1.3% GDP growth for Japan in 2023.

Japan hosts major multinational corporations such as Honda Motor Co. and Sony Group Corp., making Japan ETFs a compelling option to capitalize on their expansion. The MSCI Japan Index has outperformed the S&P 500 over the past year, delivering over 25% returns compared to the S&P 500’s 16%.

Below, we highlight the leading Japan ETFs of 2023 based on lowest fees, best 12-month returns, and highest liquidity. Leveraged ETFs are excluded due to their higher risk profile. Data is current as of June 22, 2023.

Lowest Fee Japan ETF: Franklin FTSE Japan ETF (FLJP)

• 1-Year Return: 20.7%
• Expense Ratio: 0.09%
• Dividend Yield: 2.07%
• Average Daily Volume (30 days): 458,621
• Assets Under Management: $1.3 billion
• Inception: November 2, 2017
• Issuer: Franklin Templeton

FLJP offers broad exposure to over 500 large- and mid-cap Japanese stocks across multiple sectors, tracking the FTSE Japan Capped Index. Key sectors include industrials, consumer discretionary, and information technology. Top holdings feature Toyota Motor Corp., Sony Group, and Keyence Corp.

Best 1-Year Return Japan ETF: iShares JPX-Nikkei 400 ETF (JPXN)

• 1-Year Return: 22.1%
• Expense Ratio: 0.48%
• Dividend Yield: 1.05%
• Average Daily Volume (30 days): 18,615
• Assets Under Management: $80 million
• Inception: October 23, 2001
• Issuer: BlackRock Financial Management

JPXN tracks the JPX-Nikkei Index 400, focusing on Japanese companies with strong shareholder-friendly practices, profitability, and return on equity. The fund holds about 400 stocks diversified across manufacturing, financials, and health technology sectors. Top holdings include Mitsubishi Corp., Mitsui & Co., and Sumitomo Mitsui Financial Group.

Most Liquid Japan ETF: iShares MSCI Japan ETF (EWJ)

• 1-Year Return: 20.8%
• Expense Ratio: 0.50%
• Dividend Yield: 0.89%
• Average Daily Volume (30 days): 8,269,708
• Assets Under Management: $13 billion
• Inception: March 12, 1996
• Issuer: BlackRock Financial Management

EWJ is the oldest and largest Japan ETF, renowned for its exceptional liquidity. It holds roughly 240 large-cap Japanese stocks, replicating the MSCI Japan Index. The portfolio is dominated by industrials, consumer discretionary, and IT sectors. Leading holdings include Toyota, Sony Group, and Keyence.

Note: This article is for informational purposes only and does not constitute investment advice. The author does not hold any of the ETFs mentioned as of the article date.

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