HEWJ vs SCJ

HEWJCiShares Currency Hedged MSCI Japan ETF

SCJAiShares MSCI Japan Small-Cap ETF

In short

HEWJ Japanese stocks with the yen taken out of the equation. Since 2014, HEWJ has tracked MSCI's 100% USD-hedged Japan index, so what drives the fund is the Japanese market, not the currency.

SCJ Japan past the household-name exporters. SCJ holds roughly 800 of the country's smaller listed companies, the domestic slice that large-cap Japan benchmarks leave out, and it has been running that mandate since 2007.

Stated mandate

HEWJ The fund seeks to track an index of Japanese equities while reducing the effect of yen currency fluctuations.

SCJ The fund seeks to track an index composed of small-capitalization Japanese equities.

Why people hold it

• HEWJ The hedge is built into the mandate: it follows the MSCI Japan 100% Hedged to USD Index, which aims to strip yen-versus-dollar moves out of the result.
• Launched in January 2014 under the iShares banner, so this is a long-running hedged-Japan wrapper rather than a recent launch chasing a theme.
• A clean single-country mandate: Japanese equities, nothing else blended in, with distributions paid quarterly.

• SCJ One job, done tightly: it tracks the MSCI Japan Small Cap Index, roughly 800 names deep, the part of the market big blue-chip Japan benchmarks leave on the floor.ishares.com
• Trading since 2007, so there is a long live record here, not a backtest, and it has stayed tight to its index over that stretch.
• About 800 holdings means no single stock carries the portfolio, and the 0.50% fee sits right at the median for single-country Japan funds.

Worth knowing

• HEWJ Cost is the sticking point: a 1.02% expense ratio sits well above the typical Japan fund, and Franklin's hedged rival FLJH lists 0.09%.
• A hedge cuts both ways. Removing yen weakness also removes the lift a strengthening yen would otherwise give a dollar-based holder.
• Everything rides on one market. Japan-only exposure means no cushion from other regions when Japanese equities wobble.

• SCJ 0.50% a year is the going rate for the niche, but broad Japan trackers like FLJP (0.09%) and BBJP (0.19%) charge a fraction. Small-cap coverage is the upcharge.
• Moderately traded, and Tokyo is closed while US markets are open, so spreads and price-to-value gaps can widen at the edges of the session.
• Unhedged: the holdings are priced in yen, so currency swings land on top of the stock moves, in both directions. Distributions come once or twice a year.ishares.com

Full HEWJ profile⁠

Full SCJ profile⁠