Japan Getting Crash Course in Leveraged Returns With Nikkei ETF
- Nomura suspends $6 billion fund after liquidity concerns
- SEC warned U.S. investors about dangers six years ago
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Six years ago, securities regulators told U.S. investors they were confused about leveraged exchange-traded funds and should consider avoiding them. The message has yet to catch on in Japan.
That became apparent Wednesday after the crush of money flowing into the Next Funds Nikkei 225 Leveraged Index ETF spurred its overseer to halt additional deposits, according to a statement on its website. Assets under management in the ETF have doubled since May to 734 billion yen ($6.16 billion), making it the biggest security of its kind in the world even as its price has declined almost 26 percent.