Opportunities In Japan? Perhaps

To say Japan has become the red-headed step child of Asian economies is to state the obvious. Sitting in a region littered with emerging economic heavyweights, Japan appears to be a relic of success realized yesteryear and when that success will be seen again is hard to discern. There are headwinds to be a sure. An aging population, competition for financing of sovereign debt and soaring government debt to name a few. On the other hand, valuations on Japanese stocks are becoming almost too cheap to ignore. They lagged the developed world last year, but 2011 could be their time to shine and the best way to play a Japan bounce could be with small-caps. That turns the spotlight to the WisdomTree Japan SmallCap Dividend Fund DFJ, the SPDR Russell/Nomura Small Cap Japan ETF JSC and iShares MSCI Japan Small Cap Index Fund SCJ. All are geared toward consumer discretionary and industrials and that gives investors exposure to Japanese exporters, the place to be if the yen weakens and it should. And all offer some exposure to problematic, but potentially rewarding Japanese financials. Along those lines, the investor willing to take some risk should prefer DFJ as it has the largest weighting to Japanese banks.