Big leveraged ETF blamed for amplifying Nikkei moves in closing minutes

Tokyo

IN THE final moments before Japan's stock exchange closes each day, one investor has increasingly captured the attention of traders in Tokyo: the world's biggest leveraged exchange-traded fund.

Run by Nomura Asset Management Co, the Next Funds Nikkei 225 Leveraged Index ETF has more than doubled its assets over the past five months to the equivalent of US$6.5 billion. Because it needs to buy near the end of the trading day when shares rise (or sell if they fall), the fund has been accused by some traders of amplifying moves in Asia's second-largest equity market. More than 70 per cent of the time over the past two months, the Nikkei 225 Stock Average has compounded its intraday return in the final 15 minutes.