Bank on Buffett's Favorite Japanese Stocks With This ETF

The real signal is not “Japan is cheap” but that Buffett is effectively underwriting a rerating of high-cash-generative, capital-disciplined cyclicals in a market that has spent decades discounting exactly that combination. That matters because once a marquee buyer legitimizes the shareholder-yield story, domestic institutions usually follow with slower, more structural capital reallocation rather than fast speculative flows. The strongest second-order beneficiary is not the ETF itself but the broader Japanese financials and marine/commodity-adjacent names that can now tap a lower cost of equity if buyback/dividend momentum persists.

DXJ’s appeal is less about pure Japan beta and more about a specific factor mix: undervalued balance sheets, repatriation-sensitive exporters, and increasingly explicit capital returns. The yen hedge changes the trade from a macro FX bet into a corporate quality + shareholder yield basket, which is why the setup can persist for quarters even if global growth cools. If Japanese companies continue to raise payout ratios, the valuation gap can narrow without heroic earnings growth, creating a cleaner re-rating path than many U.S. “quality” names where multiples are already full.

The contrarian risk is that investors overpay for the Buffett halo and miss that the best part of the trade may already be crowded in the obvious names. If the yen weakens sharply, the currency hedge helps near-term performance but also reduces the local-economy normalization story that underpins domestic sentiment. A more interesting risk is policy: sustained buybacks could trigger political pushback if retail investors perceive the move as benefitting foreign capital over wage growth, which would slow the rerating over a 6-12 month horizon.

The tactical edge here is to use the article as a catalyst for relative-value, not outright market exposure. The cleanest expression is long Japan shareholder-return winners versus a broad Japan index, and for equities, long the names directly in Berkshire’s Japanese basket where ownership itself is a catalyst for governance and liquidity. I would also expect a short-lived squeeze in Tokio Marine-like names after any incremental Berkshire disclosure, but that should fade unless there is confirmation of additional stakes or board-influence signaling.