Japan ETFs Can Thrill Again in 2026

Core Viewpoint - Japanese stocks and related ETFs have shown exceptional performance in 2025, with the MSCI Japan Index increasing by 25.9%, outperforming the S&P 500 by 820 basis points [1] Group 1: Performance of Japanese Stocks and ETFs - The WisdomTree Japan Hedged Equity Fund (DXJ) outperformed the MSCI Japan Index, gaining nearly 33% [2] - Japanese equities are expected to continue performing well in 2026, suggesting ongoing investment opportunities [2] Group 2: Economic Policies and Government Influence - The bullish outlook for Japanese stocks is supported by strong fundamentals and the pro-market stance of Prime Minister Sanae Takaichi, who aims to enhance Japan's relationship with the U.S. [3][4] - Takaichi's government is focused on stimulating domestic demand through spending measures and promoting public-private investments in 17 strategic areas, which could benefit various sectors [5] Group 3: Sector Implications and Corporate Governance - Key sectors such as industrials and technology, which make up over 35% of the DXJ portfolio, are expected to benefit from the government's economic agenda [6] - The administration's collaboration with the Bank of Japan (BOJ) aims to support sustainable economic growth, with a focus on corporate governance and directing cash reserves towards shareholder rewards [7][8]