FJP Overview

Investment Insights on Japan's Market

• Berkshire Hathaway's Increased Stake: Warren Buffett's Berkshire Hathaway has raised its stake in Mitsubishi Corp. to 10.23% from 9.74% and has also increased its holding in Mitsui & Co., although it remains below 10%. This move has positively impacted shares in Japanese trading houses, reflecting Buffett's confidence in these companies.

• Performance of Japanese ETFs: Several Japan-focused ETFs, including the First Trust Japan AlphaDEX Fund (FJP) and iShares MSCI Japan Value ETF (EWJV), have outperformed the SPDR S&P 500 ETF (SPY) recently, indicating strong market performance.

Economic Indicators

• Japan's GDP Growth: Japan's GDP grew by 0.3% in Q2 2025, surpassing market expectations of 0.1% and marking the fifth consecutive quarter of growth. This economic stability is a positive sign for investors.

• Valuation of Japanese Stocks: Despite recent gains, Japanese stocks remain attractively valued compared to U.S. stocks, with P/E ratios for various ETFs ranging from 14.37X to 21.85X, significantly lower than the S&P 500's P/E of approximately 33.75X.

Future Outlook

• Potential for Japan ETFs: The combination of low interest rates and a stable economy positions Japan ETFs favorably for future growth, making them an attractive option for investors looking to diversify their portfolios.

• Semiconductor Market Growth: The global semiconductor manufacturing market is projected to grow from $452 billion in 2021 to $971 billion by 2028, highlighting significant opportunities in this sector, particularly for companies not dominated by major players like NVIDIA.

• Market Reaction to Tariffs: Despite President Trump's announcement of a 15% tariff on Japanese imports, Japan ETFs surged by 3.5%–5%, driven by investor confidence in a new $550 billion trade deal with Japan that promises significant investment in the U.S. economy.

• Factors Supporting ETF Performance: The positive performance of Japan-themed ETFs is attributed to stable currency conditions, strong sector earnings, and the resilience of exporters who are well-positioned to adapt to the tariffs, leading to a relief rally in the market.

• Market Correction Concerns: Goldman Sachs warns that a deeper correction in the S&P 500, currently down over 9%, could lead to declines in global equities, as historical trends show that all stock markets typically fall during significant corrections.

• Relative Market Performance: Despite potential U.S. market downturns, European and Asian markets have shown resilience, with the STOXX Europe 600 gaining 5.8% and Hong Kong's Hang Seng rising 17%, suggesting opportunities for investors through global exchange-traded funds.

• Overview of First Trust Japan AlphaDEX ETF (FJP): Launched in 2011, FJP is a smart beta ETF focusing on the Asia-Pacific market, utilizing the NASDAQ AlphaDEX Japan Index for stock selection and has an expense ratio of 0.80% with a dividend yield of 3.35%.

• Comparison with Other ETFs: While FJP aims to outperform its segment, investors may consider lower-cost alternatives like JPMorgan BetaBuilders Japan ETF and iShares MSCI Japan ETF, which have significantly lower expense ratios and larger asset bases.

• Economic Outlook: BlackRock indicates a slowdown in the economy rather than a recession, supported by stronger-than-expected corporate earnings in the tech sector, with Q2 earnings growth for tech at 20% compared to 5% for non-tech sectors.

• Investment Strategy: The firm remains optimistic and recommends focusing on high-conviction themes such as U.S. and Japanese stocks, as well as artificial intelligence, while acknowledging potential market volatility during summer trading.

• First Trust Japan AlphaDEX ETF (FJP): Launched in 2011, FJP is a smart beta ETF offering exposure to Asia-Pacific (Developed) ETFs with specific stock selection strategies.
• Fund Details and Performance: FJP managed by First Trust Advisors, has $200.56 million in assets, an expense ratio of 0.80%, top holdings like Nomura Holdings, Inc., and has shown positive performance over the past year.