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New ETFs for Strident Japan Bulls and Bears


Exchange traded funds tracking Japan have been wildly popular this year and inflows data tell the story. As of May 31, year-to-date inflows to Japan ETFs were $23.1 billion, or 23 percent of all ETF inflows, according to BlackRock.

The WisdomTree Japan Hedged Equity Fund (DXJ) and the iShares MSCI Japan Index Fund (EWJ) remain the dominant names among Japan ETFs, although investors have embraced other products such as the DBX MSCI Japan Currency-Hedged Equity Fund (DBJP) as the yen has tumbled against the U.S. dollar. [Retail Investors Still Like Japan ETFs]

Investors’ affinity for Japan ETFs will be put to the test on Wednesday when Direxion introduces two new triple-leveraged Japan funds, the Direxion Daily Japan 3X Bull Shares (NYSEArca:JPNL) and the Direxion Daily Japan 3X Bear Shares (NYSEArca:JPNS). NYSE Euronext confirmed the debut of the funds in a statement released Monday.

The NYSE release did not indicate what index JPNL and JPNS will track, but many of Direxion’s leveraged international ETFs track indexes linked to popular non-leveraged ETFs. For example, Direxion rolled out new bullish and bearish triple-leveraged plays on Brazil and South Korea earlier this year and those ETFs track the same indexes as the iShares MSCI Brazil Capped Index Fund (EWZ) and the iShares MSCI South Korea Capped Index Fund (NYSEArca: EWY ). [Direxion Adds Leveraged Brazil, South Korea ETFs]

JPNL and JPNS will not be the first leveraged Japan ETFs on the market. ProShares, the largest issuer of so-called geared ETFs, issues the double-leveraged ProShares Ultra MSCI Japan (EZJ) and the ProShares UltraShort MSCI Japan (EWV) . Both of those funds are linked to the MSCI Japan Index, the same index tracked by EWJ.

Despite the popularity of Japan ETFs and recent increase in volatility for those funds, EZJ and EWV had less than $30 million in combined assets under management at the end of the first quarter, according to ProShares data.

ProShares Ultra MSCI Japan

ETF Trends editorial team contributed to this post.

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.