WisdomTree urges investors to add Japan, select Asia

At a recent TMX VettaFi Midyear Market Outlook Symposium, WisdomTree Global CIO Jeremy Schwartz recommended that investors increase exposure to Japan and select Asian markets amid a shift in semiconductor supply chains away from Taiwan.

Schwartz pointed to public and private capital being directed to local chip production and related infrastructure in Japan. He cited roughly 15-year government semiconductor initiatives and investments by large technology conglomerates as reasons for the shift. He asked, “Where else is the next most likely place they are going to build the semiconductor supply chain? It is in Japan.”

Currency moves affect returns on Japanese equities. A weaker yen has reduced returns for unhedged foreign investors. WisdomTree highlights the Japan Hedged Equity Fund (DXJ) to remove yen exposure. For broader sector coverage, the Japan Opportunities Fund (OPPJ) tracks an index spanning industrials, technology, materials and financials.

Schwartz also discussed rising defense spending in parts of Asia and the investment implications. WisdomTree launched the Asia Defense Fund (WDAF) to exclude mainland China and target countries increasing military budgets, including South Korea, India and Japan. South Korea represents more than a third of the fund because of its defense manufacturing capacity.

He recommended that international exposure be targeted rather than a generic allocation, suggesting a 10% to 15% sleeve in actively managed or structurally focused strategies such as OPPJ to gain exposure to long-term AI hardware leaders and to limit risks tied to local currencies and policy changes.

WisdomTree said the remarks were part of a broader discussion of international exposure for the second half of 2026 and noted the firm is marking 20 years since launching its first ETFs.