It tracks the MSCI Kokusai Index (MSCI World ex Japan Index) and reflects the performance of major developed markets excluding Japan. It is designed to capture the growth of companies across the developed world in a single holding.

It suits investors who want to build a global developed market portfolio without Japanese stocks, or who want broad overseas diversification at low cost.

Launched by Xtrackers in 2013, it is a passively managed ETF that tracks an index.

The fund holds the largest developed market stocks by market capitalization, excluding Japan, in line with their index weights, and replicates the index constituents as closely as possible. The weighting toward the US market is high, but the fund also provides exposure to Europe and other developed markets.

• Portfolio refinement by excluding exposure to the Japanese market
• Management fees that are low relative to its category

Assets under management (AUM) stand at $778.6M, and the expense ratio is 0.09% per year.

Unlike EZU and VPL in the table, which concentrate on specific regions (Europe and the Pacific), KOKU spans all developed markets outside Japan, and it is characterized by a considerably high weighting in the US market.

The fund has posted solid results, supported by the strength of large US technology stocks and the gradual rise of developed equity markets worldwide. It is free from the volatility of the Japanese stock market, but it is heavily influenced by the performance of the US market.

Demand from institutional investors pursuing global asset allocation strategies remains steady, and capital seeking pure developed market exposure without Japan continues to flow in.

Broad developed market diversification and a low expense ratio are its strengths, but the heavy reliance on the US market and the lack of exposure to Japanese market performance are factors to consider.

Among the funds in the table, EZU specializes in the Eurozone, VPL in the Pacific region including Japan, and ILF in Latin America. If you want Japan exposure alongside KOKU, you can add EWJ. To raise your US weighting, consider VTI or VOO, and to extend into emerging markets, consider VWO as well.

These are the key points to review before deciding to invest in KOKU. From a global asset allocation perspective, you should clearly understand its distinctive structure of excluding Japan and judge whether it fits your portfolio.

Although the fund invests across developed markets globally, it is closely tied to the US stock market, so investors should be aware that its asset value could fall sharply during abrupt swings in the US market.

It is an efficient vehicle for investing in high quality developed market stocks around the world, excluding Japan, at low cost. It is a suitable product for those who want to expand global exposure while avoiding overlap with their existing portfolio.