EWJV ETF

Japan's equities gained traction due to Warren Buffett's interest and regulatory actions aimed at improving investor sentiment, with notable companies like Mitsubishi UFJ Financial Group seeing price increases. BlackRock's iShares MSCI Japan Value ETF targets large- and mid-cap Japanese equities with value characteristics, but its performance hasn't outpaced the broader Japanese market. Japan's long-term economic challenges include deflation and demographic issues, but companies like Toyota and Honda maintain strong global presence and profitability.

Investing in Japan's stock market for the long term remains compelling, despite short-term worries about the Yen's instability. The iShares MSCI Japan Value ETF offers a value-oriented choice for investors looking for discounted Japanese stocks. The EWJV ETF holds established companies such as Toyota, Mitsubishi UFJ Financial Group, and Mitsubishi Corp, emphasizing undervalued businesses with strong fundamentals.

The S&P 500 just closed out best first quarter since 2019.

The iShares MSCI Japan Value ETF is similar to the iShares MSCI Japan ETF but with IT exposure mostly eliminated and redistributed into other sectors. EWJV may have more potential due to corporate governance considerations and a weaker Yen, making it a good pick for long-term investors despite Japan's run-up. EWJV has a lower expense ratio than EWJ, which is unusual, which is another reason to prefer it among the two.

Backed by earnings growth and widespread corporate governance reforms, Japanese stocks have risen strongly this year. Stocks priced at book value discounts have been the pick of the lot, supporting value-focused EWJV's outperformance. That said, there's a good chance this rally could fizzle out next year, particularly with stock valuations having already re-rated.

iShares MSCI Japan Value ETF is expected to benefit from Japan's improving economy and the flow of investment capital from China to Japan. EWJV has had an impressive performance in 2023, delivering a total return of 42.5% since late October 2022. The valuation of Japanese stocks, including those in EWJV's portfolio, is still attractive based on the revised Buffett Indicator.

EWJV, which focuses on Japanese value stocks, is receiving plenty of attention because of the huge net cash position and relatively low valuations of Japanese stocks. Despite a sturdy performance this year, valuations still look cheap, and when the BOJ pivots away from its ultra-loose policy, value stocks should still have plenty of takers. The recent dynamics on the standalone weekly chart and the relative strength chart suggest that the price action looks overextended.

EWJV is exposed heavily to industrial and consumer discretionary stocks that have a fair bit of exposure to the rate situation in Japan. Due to high levels of Japanese public debt, as well as the low levels of consumption rates in Japan compounded by demographics, rates will stay low.