This is a passive ETF that holds dividend-paying Japanese small caps using a dividend-weighted approach. It spreads investment across Japanese small companies that pay dividends, providing exposure to Japan's domestic economy and small-cap growth.

It suits investors who want to add a dividend angle to Japanese small-cap investing and who can tolerate single-country and small-cap volatility as well as currency risk.

It is a passive (index-tracking) ETF managed by WisdomTree.

The fund tracks an index that holds dividend-paying Japanese small caps, weighted by the size of their dividends. Unlike market-cap weighting, it gives more weight to companies with larger dividends. By spreading investment across small companies closely tied to Japan's domestic economy, it offers exposure to the dividends and growth of Japanese small caps.

• Exposure to Japanese small-cap dividend stocks
• Dividend-weighted approach

Assets under management (AUM) stand at $436.6M, and the total expense ratio (Expense Ratio) is an annual 0.58%.

Compared with Japanese large-cap ETFs or international core equity ETFs, the main points of comparison are its focus on Japanese small caps and its dividend weighting.

Japanese small caps are driven by Japan's domestic economy, the strength or weakness of the yen, and global risk appetite. They tend to be strong during periods of Japanese economic recovery and improving domestic demand, and weak during risk-off periods. A weaker yen can create currency losses for foreign investors.

Fund flows into Japanese small-cap dividend stocks diverge depending on Japan's economic outlook, the yen's direction, and demand for dividends. When interest in Japan's domestic economy and small caps rises, money sometimes shifts toward related products. It is also worth noting that performance varies with the yen and the Japanese economy.

Its strength is exposure to Japanese small-cap dividend stocks, while single-country concentration, small-cap volatility, and the yen exchange rate are considerations.

For exposure to Japanese large caps broadly, direct alternatives include EWJ, and for investing in Japanese stocks with a currency hedge, products such as DXJ are also worth comparing. If you want broad Japanese small-cap exposure, products such as SCJ can also be considered. The three products shown in the table, DFAI, VYMI, and DFIC, each follow international core equity and high-dividend strategies, which differ from a Japanese small-cap focus. This ETF's differentiating factor is its narrow exposure to Japanese small-cap dividend stocks.

Here are the points to review before investing in DFJ. Exposure to Japanese small-cap dividend stocks is attractive, but single-country concentration, small-cap volatility, and the yen exchange rate need to be checked in advance. It is also advisable to compare it with Japanese large-cap and currency-hedged products.

A slowdown in Japan's domestic economy, a weaker yen, and small-cap volatility are the main variables for short-term performance. Because of its single-country and small-cap concentration, drawdowns can be large during market weakness. A weaker yen creates currency losses for foreign investors.

It is a suitable candidate for investors who want to add a dividend angle to Japanese small-cap investing. If you want broad Japanese large-cap exposure, compare products such as EWJ. To hedge currency exposure, compare products such as DXJ. If you want Japanese small-cap dividend stocks, compare this product alongside them before choosing.