FLJP Stock Recent News

The Franklin FTSE Japan ETF is value-weighted and heavily exposed to the automotive and industrial sectors, making it vulnerable to a stronger Yen and potential US tariffs. We are optimistic about the Yen due to robust Japanese consumption data, but caution against large-cap investments highly correlated to the Japanese index. Higher rates in Japan could benefit financials and the Yen but hurt the broader market, especially export-reliant sectors like automotive.

Japan's markets have been strong due to Yen weakness, making Franklin FTSE Japan ETF a good long-term investment option for exposure to Japan's competitive and efficient markets. The FLJP ETF mirrors the FTSE Japan RIC Capped Index, providing broad exposure to large and mid-cap Japanese equities, including major global players like Toyota and Sony. FLJP offers low-cost access to Japan's equity market, but the fund is not currency hedged, posing a risk if the Yen strengthens significantly.

The Franklin FTSE Japan ETF is mostly value-weighted and has an overweight position in consumer discretionary and IT sectors. The Yen is weak, which is generally good for the FLJP, but it could derail the Japanese consumer, which matters for policy and for the performance of some market sectors. We thought a BoJ pivot might raise the Yen up a bit, but the pivot was underwhelming and it seems structural issues will keep the Yen weak.

Franklin FTSE Japan ETF may seem like a solid option for exposure to Japanese equities with low expense ratio and acceptable liquidity. FLJP ETF underperformed against the S&P500 despite the strong rally of the Nikkei 225 index. Lack of FX hedge in FLJP and other Japan ETFs leads to relative underperformance compared to dollar-denominated securities.

As large-cap Japanese ETFs go, the Franklin FTSE Japan ETF is one of the better options, particularly for cost-sensitive investors. Having already outperformed this year, though, valuations look stretched relative to the underlying earnings growth of Japanese large-caps. While there are positive catalysts to the Japanese story, I won't be dipping in anytime soon - not without a meaningful pullback.

We fled to where credit was flush when we saw what was happening in the West to sponsor activity and the credit crunch concerns. Japan is the only market that we were sure was not going to hike rates, even though speculation that they would have been persisting since before Christmas. With the Yen already having taken its hit in 2022, the current 2023 run shows a record of pure profit for Western investors.

Once and a while, it's worth taking a deep dive into why a particular ETF may be rising above the others, whether that's based on performance, volume, or as in this case, AUM.

Warren Buffett has been bullish on select Japanese equities for several years and the Oracle of Omaha recently told members of the press in the Land of the Rising Sun that his Berkshire Hathaway (NYSE: BRK-B) is boosting stakes in some of the Japanese financial services it currently holds shares of and is evaluating other

Investing in foreign equities amid such a complicated year for geopolitical and rising rate concerns hasn't been easy, but Japan has recently been a bright spot.

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