A US investor who put $100 into the WisdomTree Japan Hedged Equity Fund (DXJ) on 31 March 2010 had $690 on 10 November 2026. DXJ began hedging the yen the next day. The same $100 in the iShares MSCI Japan ETF (EWJ) had $292. MSCI is an index provider. Both are exchange-traded funds (ETFs), funds that trade on a stock exchange like a share. Both hold Japanese companies. DXJ also hedges the yen, which means it uses contracts to reduce the effect of the yen's moves against the dollar.
DXJ led over that period and in 2022 and 2024, when the yen lost value. EWJ led in 7 of the 15 full calendar years from 2011 to 2025.
What is the difference between EWJ and DXJ? EWJ holds large and mid-sized Japanese companies and leaves the yen unhedged. DXJ holds Japanese dividend payers that earn less than 80% of their revenue in Japan. It has hedged the yen since 1 April 2010. Before that, it was an unhedged Japan dividend fund.
From the close of 31 March 2010 to 10 November 2026, DXJ returned 12.3% a year and EWJ 6.7%. DXJ led in 8 of the 15 full calendar years from 2011 to 2025 and EWJ in 7.
In 2022 the yen lost 12.6% of its value against the dollar. EWJ fell 17.7% and DXJ rose 5.9%. In 2024 the yen lost 10.5%. EWJ rose 7.0% and DXJ rose 29.8%.
DXJ led in 7 of the 8 years the yen lost value against the dollar. EWJ led in 6 of the 7 years it gained.
What do EWJ and DXJ hold?
EWJ tracks the MSCI Japan Index, from the index provider MSCI. The index covers large and mid-sized Japanese companies. EWJ held 167 holdings on 10 November 2026.
DXJ tracks an index that WisdomTree, its issuer, built. The index takes dividend-paying companies listed in Tokyo that earn less than 80% of their revenue in Japan. It weights each company by the dividends it paid.
DXJ did not always work this way. A WisdomTree filing of 22 January 2010 says the fund, then the WisdomTree Japan Total Dividend Fund, would switch to the hedged index after the close of 31 March 2010.
The table sets the funds side by side as they stand in 2026.
EWJ | DXJ | |
|---|---|---|
Fund | iShares MSCI Japan ETF | WisdomTree Japan Hedged Equity Fund |
Index it tracks | MSCI Japan Index (Net) | WisdomTree Japan Hedged Equity Index |
Companies | Large and mid-sized Japanese companies. 167 holdings on 10 November 2026 | Dividend-paying companies listed in Tokyo that earn less than 80% of revenue in Japan, weighted by dividends paid, with a 5% cap per company at the yearly screening |
Largest sectors | Industrials 24.2%, Financials 19.4%, Consumer Discretionary 16.4% (10 November 2026) | Industrials, Consumer Discretionary, and Financials, each about 15% or more of the index (30 June 2026) |
Yen | Not hedged. The prospectus lists currency risk | Hedged with currency forward and futures contracts since 1 April 2010. Before that, not hedged |
Annual fee | 0.49% | 0.48% |
Source: iShares fund page, read 11 November 2026, and summary prospectus; WisdomTree summary prospectus of 1 August 2026, as supplemented 30 September 2026
The funds differ in the companies held and in the yen hedge. A gap in returns can come from either.
What does hedging the yen do?
A US investor who buys EWJ holds shares priced in yen. When the yen buys fewer dollars, the dollar value of the shares falls, even if share prices in yen stay flat.
We measure the yen as the number of yen that one dollar buys, called USD/JPY (US dollar against the Japanese yen, JPY). A rise means a weaker yen. It stood at 93.40 on 31 March 2010 and at 158.23 on 6 November 2026, the last reading available. The yen lost 41.0% of its dollar value over that time.
DXJ's index applies a published one-month forward rate of the yen to the full value of its shares. A forward contract fixes an exchange rate today for a date in the future. The fund uses forward contracts and currency futures to match.
A currency future does the same through a contract traded on an exchange. WisdomTree's prospectus says the hedge does not necessarily remove every currency effect.
How did EWJ and DXJ perform from 2010 to 2026?
Chart 1 starts both funds at $100 at the close of 31 March 2010 and runs to 10 November 2026. It counts dividends and uses closing prices.
Source: YX Insights price data
EWJ ended at $292, a gain of 191.9%, or 6.7% a year. DXJ ended at $690, a gain of 590.3%, or 12.3% a year. SPY (the S&P 500 ETF) returned 13.8% a year over the same dates, so both funds trailed the US market.
EWJ led at first, $90 to $77 at the end of 2011. DXJ led $151 to $127 by the end of 2015.
Volatility is how widely a fund's daily returns swing, scaled to a yearly figure. It was 18.1% for EWJ and 21.1% for DXJ. EWJ's worst fall from a high was 33.1%, from 15 September 2021 to 20 October 2022. DXJ's was 39.1%, from 17 January 2018 to 16 March 2020.
What happened to each fund in 2022 and 2024?
USD/JPY rose from 115.17 on 30 December 2021 to 131.81 on 30 December 2022, so the yen lost 12.6% of its dollar value.
In 2024, USD/JPY rose from 140.92 on 29 December 2023 to 157.37 on 31 December 2024, so the yen lost 10.5%. The yen's sharp rise in early August 2024 has its own article, The August 2024 Yen Carry Unwind.
Source: YX Insights price data; Board of Governors of the Federal Reserve System
In 2022, EWJ lost 17.7% and DXJ gained 5.9%, a gap of 23.6 percentage points. A percentage point is the plain difference between two % figures. In 2024, EWJ gained 7.0% and DXJ gained 29.8%, a gap of 22.7 points.
Both gaps are larger than the yen's move, so the yen's move does not account for all of either gap.
Does the yen decide which fund leads?
We counted the 15 full calendar years from 2011 to 2025, the full years in which DXJ hedged the yen. Each runs from the last trading day of the prior year. The yen lost value against the dollar in 8 of them. DXJ led in 7 of those 8.
The yen gained in the other 7 years. EWJ led in 6 of them. The two exceptions, EWJ in 2015 and DXJ in 2025, came in years when the yen barely moved, down 0.3% and up 0.4%.
Source: YX Insights price data; Board of Governors of the Federal Reserve System
Across the 15 years, the correlation between DXJ's lead and the yen's move is -0.86. A correlation of -1 means two numbers move in exact opposite directions, in a straight line. Here it means DXJ's lead tends to grow when the yen weakens. It does not show that the yen caused the lead.
DXJ's smallest lead in its 8 years was 6.9 points. EWJ's lead was under 2 points in 5 of its 7 years, with 11.5 points in 2020 as its largest.
A straight line fitted through the 15 points puts DXJ 2.3 points ahead in a year when the yen does not move. The gap was larger than the yen's move in 2022, 2024, and 7 other years.
What do these figures not show?
Returns use market prices, so they can differ from each fund's reported net asset value return. Net asset value is the value of a fund's holdings per share.
DXJ hedged only from 1 April 2010. From 16 June 2006, the first day of DXJ's data, to 10 November 2026, DXJ returned 9.3% a year and EWJ 4.5%. That figure mixes an unhedged fund with a hedged one, so we do not use it to judge the hedge.
The index rules come from WisdomTree's summary prospectus dated 1 August 2026, as supplemented 30 September 2026. The 2010 change comes from the filing of 22 January 2010.
The result depends on a yen that weakened from 76.98 at the end of 2011 to 158.23. The yearly counts use year-end New York noon rates from the Board of Governors of the Federal Reserve System, so they miss swings inside a year.
So which fund came out ahead?
DXJ came out ahead on return since the hedge began. It led in 2022 and 2024. EWJ swung less day to day and fell less at its worst. The answer usually flips in years when the yen gains, as in 2020.
See How Exchange Rates Work and What Is an ETF? for the basics.
Get the next explainer
The Academy is free to read, here on the web. The Long Trend, our free weekly letter, comes by email.
Learn more with YX Insights
This explainer is part of the YX Insights Academy. Each one takes a single idea and checks it against real data.
The same approach runs through everything else we publish:
Systematic Portfolio: ready-made portfolios for Macro & Megacaps and for Commodities. We publish the holdings and every change.
Multi-model Signals: a daily long-or-flat call on every name we cover. Each call shows how strongly our four models agree.
Research: company deep dives, macro commentary and essays on how we test.
Good places to start on the website:
Academy: more explainers like this one.
Start here: get our free weekly letter by email.
Macro & Megacaps Systematic Portfolio and Commodities: the two portfolios in detail.
Track record: live results since 3 August 2026, plus the ten-year backtest.
Upgrade: get the Systematic Portfolio, Multi-model Signals and research in full.
Common questions about EWJ and DXJ
What is the difference between EWJ and DXJ?
EWJ holds large and mid-sized Japanese companies and leaves the yen unhedged. DXJ holds Japanese dividend payers that earn less than 80% of their revenue in Japan, weights them by dividends, and has hedged the yen since 1 April 2010. From 31 March 2010 to 10 November 2026, DXJ returned 12.3% a year and EWJ 6.7%.
Does DXJ hedge the yen?
Yes, since 1 April 2010. Before that, DXJ was an unhedged Japan dividend fund. WisdomTree's prospectus says DXJ now uses currency forward contracts and futures to hedge the yen against the dollar. It also says the hedge does not necessarily remove every currency effect on the fund's returns.
Which fund does better when the yen falls?
DXJ led in 7 of the 8 calendar years from 2011 to 2025 when the yen lost value against the dollar. In 2022 the yen lost 12.6%. EWJ fell 17.7% while DXJ rose 5.9%. In 2024 the yen lost 10.5%. DXJ rose 29.8% against 7.0% for EWJ.
Which fund does better when the yen rises?
EWJ led in 6 of the 7 calendar years from 2011 to 2025 when the yen gained against the dollar. In 2020 the yen gained 5.3%. EWJ rose 15.4% against 4.0% for DXJ. In 2025 the yen barely moved, up 0.4%. DXJ led by 6.9 points.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
