Warren Buffett has long been known for his patient, long-term investing style, but one of his more surprising moves in recent years has been his growing enthusiasm for Japan.
According to the Financial Times, Berkshire Hathaway (NYSE: BRK.B) has increased its stakes in Japan's five biggest trading houses—Mitsubishi Corporation, Mitsui, Itochu, Marubeni, and Sumitomo Corporation—after negotiating to remove a 10% ownership cap.
Berkshire's holdings in these companies have now edged closer to 10%, with Buffett praising them for their resemblance to his own investment conglomerate.
These trading giants are critical to Japan's economy, handling imports of key raw materials such as oil, gas, iron ore, and copper while supporting Japan's powerhouse industries in automobiles, electronics, and machinery.
Warren Buffett first revealed his investment in Japan's trading houses in 2020, and in his latest shareholder letter, he reiterated his belief in their long-term potential. The Oracle of Omaha has signalled that Berkshire intends to hold these stakes "for many decades," seeing strong value in their business models.
For Australian investors, Buffett's bullish view on Japan presents an interesting opportunity. The good news? You don't need to pick individual Japanese stocks to follow his lead.
Instead, two ASX-listed exchange-traded funds (ETFs) provide easy and diversified access to Japan's thriving stock market. Here's what you need to know about them:
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iShares MSCI Japan ETF (ASX: IJP)
For those wanting broad exposure to Japan's stock market, the iShares MSCI Japan ETF could be a solid choice. This ASX ETF tracks the MSCI Japan Index, which covers approximately 85% of the Japanese stock market and provides access to large and mid-cap Japanese companies.
Why consider iShares MSCI Japan ETF?
- It offers diversified exposure to Japan's biggest and most successful businesses.
- It covers sectors like technology, consumer goods, and industrials—many of which are under-represented on the ASX.
- It allows investors to gain exposure to Japan's long-term economic growth without picking individual stocks.
Betashares Japan Currency Hedged ETF (ASX: HJPN)
Another option for Aussie investors is the Betashares Japan Currency Hedged ETF. This ASX ETF is designed to give exposure to Japan's biggest global companies while reducing the impact of currency fluctuations between the Japanese yen and the Australian dollar.
Key benefits of the Betashares Japan Currency Hedged ETF are as follows:
- It focuses on Japan's largest companies that generate significant revenue outside of Japan, making it a great way to invest in globally competitive businesses.
- It is currency-hedged, meaning that movements in the yen/AUD exchange rate won't affect returns as much.
- It provides diversification into sectors not well-represented in the Australian market.
