The Japanese economy grew at a faster-than-anticipated pace in the first quarter of 2016. According to data released earlier today, the Japanese economy grew at an annualized rate of 1.7% in the first quarter, beating consensus forecast for an increase of 0.3%.
In the four quarter of 2015, the economy had seen a contraction. Due to the first-quarter growth, Japan has avoided a technical recession. The strong growth has been achieved despite a slowdown in China and a stronger yen. This indicates that the economy is now on a firm footing and the measures implemented by the Abe government to kickstart growth are paying off.
Indeed, this might be a good time to consider the iShares Japan Fund Index CAD Hedged (TSX: CJP). The fund seeks to replicate the performance of the FTSE RAFI Japan CAD Hedged Index. It has been designed to track the top Japanese companies with the largest fundamental value weighted on the basis of total cash dividends, free cash flow, total sales and equity book value.
The fund’s top holdings include Toyota Motor Corp., Mitsubishi UFJ Financial Group and Honda Motor Co. Ltd. Year-to-date, the ETF is down more than 15%.
