A smart beta exchange traded fund, the WisdomTree Japan SmallCap Dividend ETF (DFJ Quick QuoteDFJ - Free Report) debuted on 06/16/2006, and offers 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.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

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.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Wisdomtree, and has been able to amass over $328.49 million, which makes it one of the average sized ETFs in the Asia-Pacific (Developed) ETFs. Before fees and expenses, DFJ seeks to match the performance of the WisdomTree Japan SmallCap Dividend Index.

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

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 2.66%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Us Dollar accounts for about 63.2% of total assets, followed by Japanese Yen and Dreyfus Trsy Oblig Cash Mgmt Cl Ins.

The top 10 holdings account for about 103.98% of total assets under management.

Performance and Risk

So far this year, DFJ return is roughly 0.56%, and is up roughly 32.46% in the last one year (as of 01/05/2026). During this past 52-week period, the fund has traded between $70.93 and $97.71.

DFJ has a beta of 0.41 and standard deviation of 14.88% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 814 holdings, it effectively diversifies company-specific risk .

Alternatives

WisdomTree Japan SmallCap Dividend ETF is an excellent option for investors seeking to outperform the Asia-Pacific (Developed) ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

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 $14.15 billion in assets, iShares MSCI Japan ETF has $15.69 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.