Insights 
VT 
WisdomTree Japan Hedged Equity Fund Details
DXJ, managed by WisdomTree, has amassed over $4.12 billion in assets. It is designed to replicate the performance of the WisdomTree Japan Hedged Equity Index, providing exposure to Japanese equity markets while neutralising yen fluctuations against the U.S. dollar.
With annual operating expenses at 0.48%, DXJ aligns with peer products. Its 12-month trailing dividend yield stands at 3.29%. Notably, its top holdings include assets like the U.S. dollar, accounting for 53.79% of total assets, and financial groups.
In terms of performance, DXJ has gained 21.75% this year and 25.8% in the past year. It has traded between $95.74 and $133.17 over the last year, with a beta of 0.41 and a standard deviation of 19.46% over three years. The fund contains roughly 436 holdings, diversifying company-specific risk.
Alternatives include JPMorgan BetaBuilders Japan ETF (BBJP) and iShares MSCI Japan ETF (EWJ), with assets of $14.21 billion and $15.59 billion, respectively. These alternatives offer varying expense ratios and risk levels.
Bullish Derivative Strategies
Given the fund’s 25.8% gain over the past year, we see strong upward momentum that favors bullish derivative strategies. The three-year standard deviation of 19.46% provides a baseline for volatility, suggesting that options on DXJ are likely to have moderate premiums. Traders should consider buying call options to speculate on continued gains, especially on any short-term price dips.
The most critical feature for us is the fund’s currency hedge, which neutralizes the Japanese Yen’s movement against the U.S. dollar. This makes a position in DXJ a purer play on the Japanese stock market, removing the significant variable of currency fluctuations. Therefore, our focus should be on Japanese corporate earnings and economic health, not on the USD/JPY exchange rate.
This structure is particularly relevant now in October 2025, as the interest rate differential remains wide between the Bank of Japan and the Federal Reserve. With the BoJ holding its key rate at 0.1% while the Fed funds rate is near 4.75%, the pressure on the yen continues, making this hedge extremely valuable. Unhedged Japan ETFs have underperformed as a result of this currency translation loss.
We have seen this setup before, looking back at the 2013-2015 period when a weak yen policy boosted Japanese corporate profits and DXJ’s performance. With current momentum strong, selling cash-secured puts at strike prices below the current market level could be an effective strategy. This allows for collecting premium while defining a lower entry point if the market pulls back.
The ETF’s low beta of 0.41 indicates it moves with less volatility than the broader U.S. market, making it useful for diversification. We should compare the implied volatility in the options market to the historical 19.46% figure. If implied volatility is currently elevated due to recent gains, strategies like selling covered calls against a stock position could generate income.
