The investment world remains focused on that small number of US-based growth stocks that have outperformed the rest of the market by substantial margins and pushed the major indexes higher. That’s why many investors are missing some profitable events. I like a Japanese equity ETF that doesn’t hedge the yen currency, Franklin FTSE Japan ETF (FLJP), highlights Robert Carlson, editor of Retirement Watch.
Other investments around the globe are delivering solid returns while maintaining margins of safety those growth stocks don’t have. After a sector has outperformed other investments for 10 years, especially by historic margins, it rarely repeats that performance during the next 10 years. Usually, one decade’s top performer is in the middle of the pack or lower over the next 10 years.
There already are signs more stocks are participating in the rising market. I expect the rally to expand further after the Fed makes its first interest rate cut, as long as growth remains positive.
Franklin FTSE Japan ETF (FLJP)
Japan’s stocks resumed moving upward after pausing in the spring and early summer. Japan’s market was the world’s leader in 2023, though most investors remained focused on the United States. FLJP follows a diversified index primarily composed of large and midsized stocks, typically holding about 500 names.
Recently, the 10 largest positions accounted for 24% of the fund. The top sectors were industrials, technology, consumer cyclicals, financial services, and communication services. The biggest holdings in the fund were Toyota Motor Corp. (TM), Mitsubishi UFJ Financial Group Inc. (MUFG), Sony Group Corp. (SNEJF), Hitachi Ltd. (HTHIY), and Tokyo Electron Ltd. (TOELY).
FLJP gained 4.2% in a recent four-week period, 3.4% over three months, 11.2% in 2024, and 16.3% over 12 months. Recent market action and policy moves indicate it’s likely the dollar is topping against the yen, while Japan’s stocks should continue to rise.
Recommended Action: Buy FLJP.
