Japan
Published by Radif Partners · Updated
Nikkei 225, TOPIX, Japan's corporate renaissance and shareholder reforms
This page compares 10 funds in the Japan category, with ongoing charges from 0.09% to 0.50% and a median of 0.14%. The gap between the cheapest and the dearest is worth roughly €410 over ten years on €10,000 invested: for a comparable index, that is the most reliable difference between two funds, because it rests on no assumption about markets. 6 of the 10 funds are accumulating and 9 replicate their index by holding its securities, the others using a swap. The largest fund in the list is EWJ, which matters less for returns than for the risk of closure: a fund that stays small usually ends up merged. Past performance is not used to rank this list: over the horizons published it says more about the index being tracked than about how the fund is run.
10
0.21%
+8.3%
0.09%
+20.6%
iShares MSCI Japan ETF
iShares Core MSCI Japan IMI UCITS ETF USD (Acc)
Xtrackers MSCI Japan UCITS ETF 1C
iShares MSCI Japan UCITS ETF USD (Acc)
Vanguard FTSE Japan UCITS ETF (USD) Distributing
Xtrackers Nikkei 225 UCITS ETF 1D
Franklin FTSE Japan UCITS ETF
iShares MSCI Japan SRI UCITS ETF USD (Acc)
Amundi PEA Japan TOPIX UCITS ETF Acc
HSBC MSCI Japan UCITS ETF USD
The governance reform changed the nature of the Japanese market
The Japanese market was long one of dormant balance sheets: companies sitting on cash, cross-shareholdings, and a return on equity half that of American companies. Since 2023 the Tokyo Stock Exchange has explicitly asked companies trading below book value to publish an improvement plan, which triggered an unprecedented wave of share buybacks, disposals of cross-holdings and dividend increases. That is a structural change rather than a cyclical move, and it explains part of the market's re-rating.
Two technical points remain decisive for an investor in euro. The first is currency: the yen has lost a considerable share of its value against the euro since 2021, so a rise in the Nikkei in yen could translate into a far lower return in euro. Hedged versions exist and cost the interest rate differential, which long worked in the European investor's favour. The second is the choice of index: the Nikkei 225 is price-weighted, an old method that gives outsized weight to a few holdings, whereas the TOPIX is capitalisation-weighted and covers the whole market.
What the funds in this category show
Where the money actually sits
The category holds 10 funds and 46.6B in combined assets, and those assets are not spread evenly. iShares MSCI Japan ETF (EWJ), run by iShares, holds 23.5B on its own, and the three largest, iShares MSCI Japan ETF (EWJ), iShares Core MSCI Japan IMI UCITS ETF USD (Acc) (CJPN) and Xtrackers MSCI Japan UCITS ETF 1C (XMJP), account for 75.0 % of the total. At the other end, HSBC MSCI Japan UCITS ETF USD (HMJP) manages only 262M. Size is no guarantee of quality, but it decides two very concrete things: the spread between buying and selling price you pay on every order, and the odds that the fund still exists in ten years.
The fee gap, in money
Ongoing charges run from 0.09 % for Xtrackers Nikkei 225 UCITS ETF 1D (TOPX) to 0.50 % for iShares MSCI Japan ETF (EWJ), a gap of 0.41 points, against a category average of 0.21 %. On £10,000 held for ten years that gap is roughly 410 in extra charges, before counting the return that money would itself have earned. It is the one variable in the comparison known in advance: past performance does not repeat, fees repeat every year.
Two funds in one category do not hold the same basket
The 10 funds listed track 7 different indices, among them MSCI Japan, MSCI Japan IMI, FTSE Japan and Nikkei 225. The largest tracks MSCI Japan. That spread is why two funds filed under the same theme can differ by several points over a year: they hold different securities, weight them differently and rebalance on different dates. Each fund page names its index, and that is where a serious comparison starts.
Replication and domicile
9 funds hold the constituents of their index directly, 1 use a swap, including Amundi PEA Japan TOPIX UCITS ETF Acc (PJPN) from Amundi. Synthetic replication often tracks more closely and reaches markets that are hard to hold directly, at the price of a counterparty risk that is regulated but real. Physical replication is easier to understand and allows securities lending, which earns the fund income and adds its own risk.
6 of the 10 funds are domiciled in IE, the rest in LU, US and FR. Domicile sets the withholding tax the fund itself suffers on the dividends it receives, a cost absent from the stated fee but present in the return, and it also sets your own tax treatment depending on where you live.
Accumulate or take the income
6 funds accumulate dividends, 4 pay them out. The largest accumulating share class is iShares Core MSCI Japan IMI UCITS ETF USD (Acc) (CJPN), the largest distributing one iShares MSCI Japan ETF (EWJ). The choice is not about yield, both versions of the same index return the same before tax, but about tax and discipline: the accumulating class reinvests with no cost and no decision, the distributing class pays income that is taxable in the year it arrives.
Age and critical size
The oldest fund in the category, iShares MSCI Japan ETF (EWJ), launched on 1996-03-12, giving 30 years of history, and the newest, Franklin FTSE Japan UCITS ETF (FJPN), on 2019-06-04. A long record shows how the fund behaved in a fall, which no one-year number can. A fund launched two years ago has lived through a single market regime.
None of the 10 funds manages under 100 million, the smallest being HSBC MSCI Japan UCITS ETF USD (HMJP). The category is therefore clear of closure risk for want of size, the risk that forces a sale on the issuer's timetable rather than the holder's.
Frequently asked questions
Why invest in Japanese ETFs?
Japan is the world's third-largest economy with world-class companies in technology, automotive, and industrial sectors. Recent corporate governance reforms have improved shareholder returns. Check the figure in the key information document of the exact share class your broker offers, since two classes of the same fund can differ on charges and on distribution policy.
Has Japan recovered from its lost decades?
Japanese stocks have reached new highs since 2024, driven by corporate reforms, weak yen boosting exports, and increased foreign investment. The Tokyo Stock Exchange push for better capital efficiency has been transformative. What matters more than the ranking is whether the underlying index suits your horizon and your tolerance for a fall of thirty per cent, which no score can decide for you.
What is the currency risk with Japan ETFs?
Japan ETFs expose you to JPY/EUR or JPY/USD fluctuations. A weakening yen reduces returns for European investors. Some ETFs offer currency-hedged share classes to mitigate this. Past performance over these horizons says more about the index than about the fund, which is why the comparison here weighs cost, size and tracking quality instead.
Which Japan ETFs are best for European investors?
Popular UCITS options include Vanguard FTSE Japan (VJPN, 0.10% TER) and Xtrackers MSCI Japan (XMJP, 0.12% TER). Both offer low-cost exposure to the Japanese equity market. Over a ten-year horizon the ongoing charge weighs more than any difference in past performance: 0.20% against 0.50% on €10,000 is about €300, compounded.