Skip to content
Subscriber Only

Here’s Why Japanese Investors Have Gone Ga-ga Over That Leveraged ETF

Abenomics in action.

Abenomics in action.

Photographer: Haruyoshi Yamaguchi/Bloomberg

Japanese investors appear to have fallen head-over-heels in love with a leveraged ETF.

The NEXT FUNDS Nikkei 225 Leveraged Index ETF–which uses derivatives to provide twice the daily performance of the Nikkei 225 Index–is up 260 percent since launching and despite a big dip over the past two months. That's actually more than two times the return of the index–a phenomenon in leveraged ETFs known as the compounding effect