Launched on 06/16/2006, the WisdomTree Japan SmallCap Dividend ETF (DFJ Quick QuoteDFJ - Free Report) is a smart beta exchange traded fund offering broad exposure to the Asia-Pacific (Developed) ETFs category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Because the fund has amassed over $284.32 million, this makes it one of the average sized ETFs in the Asia-Pacific (Developed) ETFs. DFJ is managed by Wisdomtree. DFJ seeks to match the performance of the WisdomTree Japan SmallCap Dividend Index before fees and expenses.

The WisdomTree Japan SmallCap Dividend Index is comprised of dividend-paying small capitalization companies in Japan.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.58% for DFJ, making it on par with most peer products in the space.

DFJ's 12-month trailing dividend yield is 2.52%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Taking into account individual holdings, Us Dollaraccounts for about 90.8% of the fund's total assets, followed by Japanese Yen and Toyo Tire Co.

Its top 10 holdings account for approximately 104.34% of DFJ's total assets under management.

Performance and Risk

Year-to-date, the WisdomTree Japan SmallCap Dividend ETF has added roughly 12.7% so far, and it's up approximately 15.3% over the last 12 months (as of 06/26/2025). DFJ has traded between $70.93 and $86.00 in this past 52-week period.

The ETF has a beta of 0.39 and standard deviation of 15.66% for the trailing three-year period, making it a medium risk choice in the space. With about 770 holdings, it effectively diversifies company-specific risk .

Alternatives

WisdomTree Japan SmallCap Dividend ETF is a reasonable option for investors seeking to outperform the Asia-Pacific (Developed) ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

JPMorgan BetaBuilders Japan ETF (BBJP) tracks MORNINGSTAR JAPAN TRGT MRKT EXPOSURE ID and the iShares MSCI Japan ETF (EWJ) tracks MSCI Japan Index. JPMorgan BetaBuilders Japan ETF has $12.87 billion in assets, iShares MSCI Japan ETF has $14.79 billion. BBJP has an expense ratio of 0.19% and EWJ changes 0.50%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Asia-Pacific (Developed) ETFs

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.