By Suzanne McGee and Tom Westbrook
(Multibagger) - Discover why actively managed exchange-traded funds (ETFs) are outperforming index-based products in the aftermath of the recent Bank of Japan interest rate hike. Market analysts are seeing major opportunities for investors in Japan-focused ETFs, as they bounce back from the recent selloff.
With the Matthews Japan Active ETF leading the pack with a 21.7% return this year, compared to its index-based peers, it's clear that taking an active approach to investing in Japan can yield significant gains. This fund, with only $3.8 million in assets, has shown that cherry-picking specific stocks during market fluctuations can lead to long-term outperformance.
Japan's market landscape offers ample room for active stock-picking, especially in sectors like factory automation, construction, technology, conglomerates, and retail companies. As market strategists predict higher returns on Japanese stocks, now is the time for investors to focus on individual stocks rather than market indexes.
While actively managed ETFs may come with higher fees than index-based funds, the potential for higher returns justifies the cost. WisdomTree Investments still prefers index-based ETFs but offers customized quantitative benchmarks that focus on value elements. The WisdomTree Japan Hedged SmallCap Equity Fund, for example, has seen significant inflows and impressive returns this year.
Overall, the recent market volatility in Japan presents a long-term opportunity for investors. By leveraging actively managed ETFs and focusing on individual stock opportunities, investors can position themselves for continued growth in the Japanese market.