WisdomTree’s Christopher Gannatti on Berkshire’s pivot from Japan’s trading houses to its insurers, and the repricing advisors should not miss
For more than a decade, WisdomTree has treated Japan less as a tactical allocation and more as a continuous research project. Christopher Gannatti, the firm’s Global Head of Research, has been at the center of that work since 2010, when he joined as a 16-year veteran-in-the-making alongside Global CIO Jeremy Schwartz.
His tenure has carried him from a nearly five-year posting as WisdomTree’s Europe head of research in London to investor conversations across Mexico, Chile, Colombia, and Peru, but Japan has remained one of the firm’s most enduring research preoccupations.
That continuity matters now, because the most consequential signal in Japanese equities today is the steady, deliberate expansion of Berkshire Hathaway’s footprint in Tokyo, and reading it correctly requires a memory longer than the news cycle.
From trading houses to Tokio Marine
Warren Buffett’s original Japan thesis, disclosed in his 2024 shareholder letter, centered on five trading houses Berkshire had quietly accumulated since 2019. “It’s gone well,” Gannatti paraphrases of Buffett’s message, “and we are planning to continue to hold these companies.”
The letter performed two functions at once: it confirmed strong performance and it telegraphed intent. Buffett rarely writes about non-US opportunities, and when he does, the signal carries disproportionate weight. “When he would mention something about anything non-US, to us, it stood out like a siren,” Gannatti said.
Earlier this year, the picture widened. Berkshire disclosed a stake in Tokio Marine, a Japanese insurer, at a level meaningful enough to require public reporting, closer to two or three percent of the company rather than ten. The headlines surrounding the announcement were dominated by marine insurance exposure tied to the Strait of Hormuz, but the deeper logic ran in a different direction.
Berkshire’s classic architecture is to take in insurance premiums and redeploy them into long-duration equity opportunities. “That’s really what has made Berkshire into the company that it is today,” Gannatti said, noting that historically the model had operated almost entirely through US-domiciled insurers. The migration of that template to Japan, in his view, suggests something broader is in motion. WisdomTree expects that when Berkshire files its full 13F holdings around May 15, Tokio Marine may not stand alone.
The structural case beneath the signal
Berkshire’s expansion resonates because it confirms a shift WisdomTree has been tracking since 2012. Japan trades at a persistent valuation discount to the S&P 500, historically justified by lower returns on equity and lower profitability, a function of an economy oriented toward physical production rather than the asset-light, intellectual-property-driven model that defines US technology leaders.
Nvidia, Gannatti noted, designs systems and outsources manufacturing to Taiwan, which keeps capital intensity low and returns on equity high. Japanese firms, by contrast, run the factories. “Japan is one of those economies where they are physically very good at making certain things,” he said. “They have a lot of productive capacity, productive assets, and manufacturing know-how.”
What has changed is the trajectory of shareholder returns. Even against a backdrop of macro risks, including energy import dependency for an island economy and geopolitical pressure radiating from the Middle East, Japanese corporates are returning capital at an unprecedented pace, with annual buybacks running at ¥18 to ¥20 trillion alongside rising dividends.
The Tokyo Stock Exchange and allied institutions have spent more than a decade rewiring corporate behavior around these practices, an agenda that began under Abenomics and has carried into the policy posture associated with Prime Minister Takaichi. “There is a ring of similarity between what Takaichi stands for and what Prime Minister Abe stood for,” Gannatti said.
U.S. investors are accustomed to companies like Apple authorizing $100 billion buybacks without surprise, while in Japan, “you are able to get in on the ground floor.” The result is a market where returns are driven by earnings growth rather than multiple expansion. “Investors tend to love it when the return is largely coming from growth,” Gannatti said, contrasting it with “hopes and dreams” pricing, “where you think there is something exciting there, and as a result, whatever you are looking at gets more and more expensive.”
The WisdomTree Japan Opportunities Fund (OPPJ), an ETF designed to capture this structural opportunity, currently shows an equity risk premium of 6.7 percent, against three percent for the S&P 500, even with US interest rates running higher than Japan’s.
A more discerning investor in 2026
Foreign capital is engaging with Japan differently than it did in the last cycle. “In 2013, all you had to say was, are you hedging the currency? That was it,” Gannatti said. “Today, investors care about the individual stocks favored by Berkshire. They care about the stocks emphasizing shareholder yield, the buyback, the dividend.”
Japan’s industrial base sits at the center of that interest. The country supplies much of the precision equipment inside Taiwanese semiconductor fabs and maintains a vibrant robotics sector transitioning from repetitive tasks into AI-informed adaptive systems. “The machines in the Taiwanese factories, a lot of them come from Japan,” Gannatti noted.
OPPJ translates this governance shift into portfolio exposure systematically. The fund’s methodology explicitly references companies in which Berkshire Hathaway holds a significant interest, screens for total shareholder yield, and incorporates thematic exposure across robotics, AI, and defense. “The methodology actually specifies Berkshire Hathaway,” Gannatti said. Companies issuing more shares than they retire, or declining to pay a dividend, are screened against. A dynamic currency hedge sits across the portfolio, adjusted monthly against central bank posture in both economies.
For advisors weighing whether Japan belongs as a core allocation rather than a tactical satellite, Gannatti’s answer is direct. Once the decision is made affirmatively, OPPJ is constructed to function as a standalone Japan position, with the governance reforms and capital return discipline Gannatti calls “a core tenet to the Japan story” serving as its foundation.
This article has been produced in partnership with WisdomTree
For details on OPPJ holdings and standardized performance, please click here.
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There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. The Fund focuses its investments in Japan, thereby increasing the impact of events and developments in Japan that can adversely affect performance. Derivative investments can be volatile and these investments may be less liquid than other securities, and more sensitive to the effect of varied economic conditions. As this Fund can have a high concentration in some issuers, the Fund can be adversely impacted by changes affecting those issuers. Due to the investment strategy of this Fund, it may make higher capital gain distributions than other ETFs. Dividends are not guaranteed, and a company currently paying dividends may cease paying dividends at any time. The Fund invests in the securities included in, or representative of, its Index regardless of their investment merit and the Fund does not attempt to outperform its Index. The composition of the Index is governed by an Index Committee and the Index may not perform as intended. Please read the Fund’s prospectus for specific details regarding the Fund’s risk profile.
Christopher Gannatti is a registered representative of Foreside Fund Services, LLC.
WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S.
