---
title: "Unhedged Japan rose 2.5% on the yen; Europe funds slipped"
url: "https://etf.net/news/unhedged-japan-rose-2-5-on-the-yen-europe-funds-slipped-2026-09-05"
published_at: "2026-09-05T13:14:14.192Z"
updated_at: "2026-09-05T13:14:14.192Z"
byline: "ETF.net Research"
---

# Unhedged Japan rose 2.5% on the yen; Europe funds slipped

The yen trust FXY gained 2.5% in the week through Friday, September 4, matching unhedged Japan ETFs; hedged Japan was little changed and Vanguard's Europe fund fell 0.3%.

By ETF.net Research. Published Sep 5, 2026.

Tokyo's Nikkei 225 fell **2.1%** in local terms over the week through Friday, September 4, from 66,405.56 to 65,020.94. The iShares MSCI Japan ETF EWJ, which holds Japanese stocks and leaves the yen unhedged, still gained **2.5%** in dollars.

The iShares Currency Hedged MSCI Japan ETF HEWJ, the same MSCI Japan book with the dollar-yen overlay stripped out, gained **0.1%**. A yen-hedged Japan equity fund, DXJ, finished unchanged. Franklin's unhedged FTSE Japan fund FLJP gained **2.4%**, in line with EWJ. Four Japan equity products, two hedging choices: the unhedged funds matched the Invesco CurrencyShares Japanese Yen Trust FXY, which rose **2.5%**. The hedged pair barely moved.

Chart: Unhedged Japan **tracked** the yen; the hedge did not

Bank of Japan Governor Kazuo Ueda said Tuesday that officials would discuss policy at the September 17-18 meeting, as they do at every meeting, with underlying inflation approaching the 2% target and more attention due on upside price risks.

## Europe's funds fell 0.3%, and the euro did not offset it

Europe did not get a currency costume. The Vanguard FTSE Europe ETF VGK, developed Europe stocks in dollars, fell **0.3%**. The Xtrackers MSCI Europe Hedged Equity ETF DBEU, the same region with currencies hedged back to the dollar, also fell **0.3%**. The euro barely moved; the loss was the stocks.

Eurostat's flash estimate on Tuesday put euro-area annual inflation at **3.3%**, up from 2.9% in July. Energy posted the highest annual rate, at 14.3%. The same week the WTI crude-oil fund USO rose **9.5%**, with a 5.5% session on Tuesday. VGK dropped **1.0%** that Tuesday and recovered most of it by Thursday.

The iShares MSCI Germany ETF EWG fell **1.6%**, the weak end of the map. Siemens is 12% of that fund and fell 5.9%. The iShares MSCI France ETF EWQ fell 1.1%. The iShares MSCI Eurozone ETF EZU dropped 0.5%. The iShares MSCI United Kingdom ETF EWU was the hold-up, up **0.1%**. Broad Europe had a better week than the euro-area large-cap slice because London did not join Frankfurt and Paris.

None of that is new for 2026. EWG is up **5.3%** year to date. VGK is up **11.7%**. The Vanguard FTSE Developed Markets ETF VEA, the developed-ex-U.S. workhorse, is up **18.9%**. Germany's lag is a year-to-date gap, not a one-week print.

## The developed sleeve was not a Europe-plus-Japan average

VEA gained **1.0%**. The iShares MSCI EAFE ETF EFA, developed Europe, Japan, and Australasia, and not Canada or Korea, gained **0.6%**. Currency-hedged EAFE, HEFA, gained **0.1%**: even in the broader developed book, the yen was most of the dollar return.

VEA is not a Europe-and-Japan blend. As of June 30, Japan was **21%** of its stocks, Korea **10.2%**, and Europe **49%**, with Canada another 10.5%. MSCI EAFE excludes Korea and Canada; the FTSE index VEA tracks does not. Samsung Electronics is still the largest holding, at 2.5%, and SK hynix is third, at 1.9%. The iShares MSCI South Korea ETF EWY rose 4.8%, most of it on Friday. Canada, EWC, added 0.5%; Australia, EWA, 0.8%. A holder of VEA had a 1.0% week with Japan-in-dollars, a Korea sleeve EAFE does not own, and the rest of the Pacific more than offsetting a small European loss. A holder of VGK had only the loss.

Chart: VEA **broke** back above 100; VGK did not

The hedge split that defined Japan did not show up in Europe, and it did show up in the EAFE pair.

Table: Fund, Week, YTD

Hedging Japan had been the winning side of that pair for a year: HEWJ is up **41.1%** over 12 months, EWJ **30.2%**, with the yen trust down **5.3%**. This was the week the hedge stopped paying. The Bank of Japan meets September 17-18. The European Central Bank announces its rate decision first, on Thursday, September 10.

Source: etf.net, https://etf.net/news/unhedged-japan-rose-2-5-on-the-yen-europe-funds-slipped-2026-09-05. Please cite the page URL.