iShares JPX-Nikkei 400 ETF (JPXN)

iShares JPX-Nikkei 400 ETF Overview

Profile

The iShares JPX-Nikkei 400 ETF (EWJ) seeks to track the investment results of the Nikkei 400 Index. The ETF invests in a portfolio of Japanese equities, with a focus on large and mid-cap companies across various sectors. It is passively managed and uses a full-replication strategy to closely track the underlying index.

Objective

The primary investment goal of EWJ is to provide investors with exposure to the performance of the Japanese stock market, specifically the broad market segment represented by the Nikkei 400 Index.

Issuer

iShares is a leading global provider of exchange-traded funds (ETFs) with over $2.8 trillion in assets under management. It is a subsidiary of BlackRock, the world's largest asset manager.

Reputation and Reliability: iShares is a highly reputable and reliable company with a strong track record of managing ETFs. It has been recognized for its innovation, transparency, and commitment to client service.

Management: The iShares ETF Trust is managed by BlackRock Asset Management, a team of experienced professionals with deep expertise in the financial markets.

Market Share

EWJ is one of the largest ETFs tracking the Japanese market, with approximately $5.7 billion in assets under management. It holds a significant market share within the Japan Equity ETFs category.

Total Net Assets

As of October 26, 2023, EWJ has $5.7 billion in total net assets.

Moat

EWJ's competitive advantages include:

• Brand Recognition: As part of the iShares family, EWJ benefits from the brand recognition and reputation of a leading ETF provider.
• Liquidity: The ETF's large size and high trading volume ensure efficient trading and low bid-ask spreads.
• Low Expense Ratio: With an expense ratio of 0.40%, EWJ is a relatively low-cost way to access the Japanese market.
• Diversification: The ETF provides broad exposure to the Japanese stock market, covering various sectors and company sizes.

Financial Performance

Historical Performance: EWJ has generated an average annual return of 8.5% over the past 5 years, exceeding the performance of the Nikkei 400 Index.

Benchmark Comparison: EWJ has consistently outperformed its benchmark index, the Nikkei 400 Index, demonstrating its ability to track the market effectively.

Growth Trajectory

The Japanese economy is expected to grow at a moderate pace in the coming years, driven by factors such as increased tourism and government stimulus. This could translate to positive growth for EWJ in the long term.

Liquidity

Average Trading Volume: EWJ has an average daily trading volume of over 10 million shares, ensuring high liquidity and easy trading.

Bid-Ask Spread: The bid-ask spread for EWJ is typically tight, indicating low transaction costs.

Market Dynamics

Factors influencing EWJ's market environment include:

• Economic Growth: The performance of the Japanese economy can significantly impact the ETF's performance.
• Yen Exchange Rate: Fluctuations in the value of the Japanese Yen can affect the ETF's returns.
• Investor Sentiment: Market sentiment towards Japanese equities can influence the demand for EWJ.

Competitors

• Schwab Japan Equity ETF (JAPA): 0.07% expense ratio, $1.6 billion in assets.
• VanEck Merk Japan Leaders ETF (JLE): 0.48% expense ratio, $1.7 billion in assets.
• iShares MSCI Japan ETF (EWJ): 0.42% expense ratio, $17.6 billion in assets.

Expense Ratio

The expense ratio for EWJ is 0.40%. This includes management fees and other operational costs.

Investment Approach and Strategy

Strategy: EWJ tracks the Nikkei 400 Index, which consists of 400 large and mid-cap Japanese companies. The ETF uses a full-replication strategy, meaning it holds all the stocks in the same proportion as the index.

Composition: EWJ primarily invests in stocks, with a focus on large and mid-cap companies across various sectors, including financials, technology, consumer discretionary, and industrials.

Key Points

• Large and liquid ETF tracking the Nikkei 400 Index.
• Provides broad exposure to the Japanese stock market.
• Low expense ratio and tight bid-ask spread.
• Outperforms benchmark index and has a long-term growth trajectory.

Risks

• Market Risk: The ETF is subject to market risks such as changes in interest rates, economic conditions, and investor sentiment.
• Volatility: The Japanese stock market can be volatile, which can impact the ETF's price.
• Currency Risk: Fluctuations in the value of the Japanese Yen can affect the ETF's returns.
• Issuer Risk: The performance of the ETF is dependent on the management capabilities of iShares.

Who Should Consider Investing

EWJ is suitable for investors seeking:

• Exposure to the Japanese stock market.
• Diversification across various sectors and company sizes.
• Low-cost investment with a passive management approach.
• Long-term capital appreciation potential.

Fundamental Rating Based on AI

Based on an AI-based rating system, EWJ receives a 9 out of 10. This rating considers factors such as the ETF's financial health, market position, historical performance, and future prospects. The ETF demonstrates strong fundamentals, with a low expense ratio, efficient tracking of the benchmark, and a potential for long-term growth.

Resources and Disclaimers

• iShares JPX-Nikkei 400 ETF (EWJ): https://www.ishares.com/us/products/etf-category/asset-classes/equity/251592
• BlackRock: https://www.blackrock.com/
• Nikkei 400 Index: https://indexes.nikkei.co.jp/nkave/index/nikkeiave.cfm

This information is provided for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.