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Japan has been a star performer for much of 2013, as the country’s market has boomed thanks to an increase in inflation targets, and extreme monetary easing. Broad stocks in Japan have far outpaced other developed markets, and many believed that the country would continue to surge well into the summer as well.

However, there have been a few bumps in the road as of late, suggesting to some that the Japanese ETF success story may be coming to a close. Recent trading has been quite choppy in the country, while Japan’s benchmark Nikkei index recently experienced a one day loss of roughly 7%, as a confluence of factors led to this mini-crash (read Inside the Crash in Japan ETFs).

Beyond some much needed profit taking, there were also a host of issues that led to this steep slide in the market. Weakness in Chinese manufacturing data was obviously a key catalyst, while concerns over the U.S. tapering off its asset buying program also spooked Japanese investors as well.

Overall, some might be growing more concerned about the market given its enormous run-up so far in 2013 and feel that Japan has gone as far as it can go for now. While we still think Japan has a bit of room to run higher, it is worth noting that there are plenty of ETFs that can offer up exposure to Asia without the influence of Japan (read Asia Ex-Japan ETF Investing 101).

These funds take an ex-Japan approach to investing in Asia, and thus give investors exposure to a number of key markets across the region. However, there are several choices in this market, suggesting that looking at the Zacks ETF Rank could be one way to narrow down the field to a manageable level.

Zacks ETF Rank

The Zacks ETF Rank provides a recommendation for the ETF in the context of our outlook for the underlying industry, sector, style box, or asset class. Our proprietary methodology also takes into account the risk preferences of investors. ETFs are ranked on a scale of 1 (Strong Buy) to 5 (Strong Sell) while they also receive one of three risk ratings, namely, Low, Medium, or High.

The aim of our models is to select the best ETFs within each risk category. We assign each ETF one of five ranks within each risk bucket. Thus, the Zacks Rank reflects the expected return of an ETF relative to other products with a similar level of risk (read Zacks ETF Rank Guide).

For investors seeking to apply this methodology to their portfolio in the Asia excluding Japan subset, we have taken a closer look at the top ranked fund in this space, the WisdomTree Asia-Pacific ex-Japan Fund (AXJL - ETF report) below:

 AXJL in focus

AXJL tracks the WisdomTree Asia Pacific ex-Japan index, a dividend-weighted benchmark targeting a number of countries in the broad Asia region. In total, the fund holds about 200 securities and charges investors 50 basis points a year in fees for exposure.

In terms of holdings, the fund is pretty well diversified, but the dividend focus leaves the ETF heavily concentrated in financials and telecoms, as these account for roughly half the portfolio. Beyond that, the ETF has roughly 20% in the combined sectors of energy and materials, while it is light in health care, real estate, and cyclical consumer stocks (see Inside the Top Ranked Consumer ETF).

From a national perspective, the ETF does a good job of splitting up holdings between both developed and emerging markets in the broad Asia-Pacific region. Australia accounts for roughly 25% of assets, followed closely by China (22%), while Taiwan and Singapore round out the rest of the top four.

Volume is a little light in the product though assets are pretty good around $100 million. Still, the ETF has been a decent performer while its focus on dividend companies has helped the product to achieve a 30-Day SEC yield of nearly 3%, a pretty good income level for any broad-based product.

Other Options

Beyond AXJL, investors have a few other choices in the Asia ex-Japan ETF space. (FPA - ETF report) is another ETF that has a solid rank—though it has a Zacks ETF Rank of 2—while investors have the more popular (EPP - ETF report)—which has a rank of 3—to choose from too (see all the Top Ranked ETFs).

While any of these are solid options for getting broad ex-Japan exposure, AXJL has managed to outperform in recent weeks by a decent margin:

So, for investors seeking a broad play on the space, AXJL could make for an interesting choice. The fund is well diversified, a solid performer lately, and best of all, it has a top Zacks ETF Rank which suggests it will continue to outperform in the months ahead as well.

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