BBJP: Yen Declines Generally Benefit Japan, But Tariffs Hit Most Allocations

2025-07-17 11:54:44 ET

The JPMorgan BetaBuilders Japan ETF ( BBJP ) is a lower expense ratio ETF than the iShares MSCI Japan ETF ( EWJ ) despite a more particular mandate at 0.19% compared to 0.5% . The differences in exposures are negligible in terms of sector, so we strictly prefer the BBJP over the EWJ. It is also better in exposures to the more value-focused Japanese indices like the iShares MSCI Japan Value ETF ( EWJV ) due to the greater exposure to IT, where value ETFs favour more exposed industries like financials and heavier industry, affected by a weaker Yen and tariffs. But even within IT, Japan has more exposure than most to hardware which will still be at risk of tariffs. The benefit of the bulk of Japanese companies in the broader index to the possibly weakening Yen due to election and fiscal uncertainty will likely be offset by the scale in change of competitiveness of Japanese export to the crucial US market, accounting for about 20% of their export . Tariffs are going from negligible in the US to possibly 25% absent a trade deal. While a weakening Yen, though it benefits across all end markets by geography, will likely not weaken to that extent - and the US typically commands the bulk of the geography mix in Japanese stocks, reflected in the economy's overall high export ratio to the US. Keep in mind also that other export led countries such as many in Europe are also being affected by tariffs, and Japanese products will have to compete more fiercely on an incremental basis in the remaining markets with those reconfigured flows....

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