Japanese Exports Power Economy

Japan's strong exports and consumer demand back strong performances in both world trade and the home economy. As a result, a new Japanese index fund was launched.

As we pointed out in our article Japan's Trade Buddies, Japan's economy has come out of a long-term restructuring and is now on a sustained growth path.

Fourth quarter 2006 marked the eighth straight quarters of improvement for the Japanese economy. With an annualized expansion rate of 4.8%, Japan's performance in the latest quarter far exceeded what experts had expected.

Japanese exports performed well, particularly its software, general machinery and high-tech equipment such as car navigation systems. Japanese private-sector consumption of cars, flat-screen TVs and hotel accommodation also accounted for a significant part of increased demand.

To recognize the healthier Japanese investment climate, February 14, 2007 saw a new Japanese Exchange Traded Fund introduced on Canada's top stock exchange.

The Claymore Japan Fundamental Index ETF C$ Hedged (TSX:CJP) was designed to replicate the performance of the FTSE RAFI Japan C$ Hedged Index. Exposure to Japanese currency is hedged to reduce foreign currency return risks for Canadian investors.

As of December 31, the index's top industry weightings were: Consumer Goods (27% of CJP's total assets), Industrials (18.7%), Financials (10.8%), Consumer Services (8.6%), Utilities (8.4%), Telecom (7.9%), Basic Materials (7.7%), Technology (5.5%), Health Care (3.5%) and Oil & Gas (1.92%).

CJP's top ten holdings were:

• Toyota Motor (5.5% of CJP's total assets)
• NTT (4.7%)
• Tokyo Elec. Power (2.3%)
• Honda Motor Co. (2.2%)
• NTT Docomo (2.1%)
• Nissan Motor (1.7%)
• Canon (1.60%)
• Matsushita Electric Ind. (1.4%)
• Sony Corp. (1.4%)
• Seven & I Holding (1.3%)