Triple Bet on Japanese Bull Market

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

Looking back at 2013, not many markets outside of the United States performed well throughout the year. However, thanks to Prime Minister Shinzo Abe’s aggressive yen-hedging policies, Japan has excelled and risen above the fray. A similarly aggressive way to capitalize on continued Japanese market gains is the Direxion Daily Japan Bull 3X Shares (JPNL).

This non-diversified exchange-traded fund (ETF) seeks, before fees and expenses, to replicate 300% of the daily performance of the MSCI Japan Index. This index measures the performance of the large- and mid-cap segments of Japan’s equity market. JPNL only began trading on June 26, 2013. Since then, this ETF has risen 27.14%. As a triple-leveraged fund, JPNL is especially volatile, as the chart below demonstrates.

JPNL_121113

This fund is invested in a broad array of sectors, including consumer cyclical, 19.19%; industrials, 18.42%; financial services, 15.81; and technology, 11.71%. It has smaller allocations to basic materials, real estate, consumer defensive, healthcare, utilities, communication services and energy. As a fund following three times the performance of a country-covering index, JPNL does not invest in any individual companies’ stocks.

With the weakening of the yen, the bull is in Japan’s shop now. As a fund that is designed to triple the gains of an index, Direxion Daily Japan Bull 3X Shares (JPNL) provides a way to grab this opportunity by the horns. Though its volatility can mean a bumpy ride, investors who hang on could see increased returns from Japan’s improving economy.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter article from last week about another Japanese fund, DXJS. I also invite you to comment about my column in the space provided below.

previous article

I suspect that stocks will not have the kind of relatively care-free year they had this year, but that doesn’t mean the bulls are going to run and hide.

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