Volume Spikes In Leveraged Japan ETFs

ETF Trends

Fallout from the astonishing overnight decline in Japanese stocks is having a predictable impact on popular ETFs such as the WisdomTree Japan Hedged Equity Fund (DXJ) and the iShares MSCI Japan Index Fund (EWJ) .

The sell-off in Japanese equities, Asia’s best performers in 2013, has also triggered volume spikes in some obscure leveraged ETFs and ETNs that are devoted to the world’s third-largest economy. That is good news for one ETF, but not so much for the others. [Top Selling Japan ETFs Drop 8% On Nikkei Crash]

The ProShares UltraShort MSCI Japan (EWV) , the double-leveraged inverse equivalent of EWJ, is soaring by 12.6% Thursday. Volume in EWV reached nearly five times the daily average in less than the first 90 minutes of Thursday’s U.S. session. EWV had just under $7 million in assets under management as of March 31, according to ProShares data.

EWV’s bullish cousin, the ProShares Ultra MSCI Japan (EZJ) is, not surprisingly, getting the opposite treatment. EZJ is off 13% on volume that is already approximately five times the trailing three-month daily average. Despite the stellar performance of Japanese stocks this year, EZJ had just $22.1 million in assets as of March 31, according to ProShares data.

The Powershares DB 3x Inverse Japanese Government Bond ETN(JGBD) , which tracks an index that is intended to measure the performance of a notional short position in 10-year JGB futures, is lower by 2.4% on volume that is double the daily average.

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ETF Trends editorial team contributed to this story.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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