Core Viewpoint - Investors are observing the out-performance of ex-US developed markets, particularly Japanese stocks, compared to domestic equity gauges, with significant gaps noted between relevant ETFs and their U.S. counterparts [1] Group 1: Performance of DXJ - The WisdomTree Japan Hedged Equity Fund (DXJ) has increased by 25.30% year-to-date, making it one of the largest funds in the Japan ETF category [2] - The strong performance of DXJ is attributed to "Sanaenomics," the economic agenda of new Japanese Prime Minister Sanae Takaichi, which extends pro-market reforms [3][4] Group 2: Economic Policies and Sector Focus - Takaichi's economic agenda emphasizes targeted spending on strategic sectors such as AI, semiconductors, energy, and defense, aimed at enhancing Japan's economic security [5] - The ETF allocates 24.31% of its weight to industrial sectors, its largest sector exposure, and 10.44% to technology stocks, which are relevant given the focus on AI [5] Group 3: Supporting Factors for Japanese Stocks - Positive factors supporting Japanese stocks include rising US stock prices due to anticipated rate cuts by the US Federal Reserve and strong earnings from major US semiconductor companies [6] - The formation of a coalition government in Japan has raised hopes for proactive economic stimulus policies, providing additional support for equities [6] - Takaichi's inclination towards monetary easing may lead to a gradual weakening of the yen, which could benefit DXJ's currency hedging structure [6]

- The report does not contain any specific quantitative models or factors for analysis and construction[1][2][3] - The report primarily focuses on macroeconomic trends, asset allocation strategies, and market outlooks without detailing quantitative models or factors[6][30][7] - No formulas, construction processes, or backtesting results for quantitative models or factors are provided in the report[13][16][20]