ProShares Ultra MSCI Japan (EZJ) seeks to deliver twice (2x) the daily performance of the MSCI Japan Index, which measures the performance of large- and mid-cap Japanese stocks across all sectors. This leveraged ETF provides amplified exposure to approximately 320 Japanese companies including Toyota, Sony, and SoftBank.
How It Works
EZJ uses derivatives including swaps and futures contracts to achieve 200% daily exposure to its underlying index. The fund rebalances daily to maintain its 2x leverage target, which means it seeks to double the index's daily moves but not necessarily longer-term returns. As a passively managed fund, it doesn't select individual stocks but rather uses financial instruments to replicate twice the index performance each trading day.
Key Features
- Provides 2x leveraged exposure to Japanese equities, amplifying both gains and losses from Japan's stock market movements
- Daily rebalancing maintains precise 2x leverage target but creates compounding effects that deviate from 2x longer-term returns
- Covers Japan's largest companies across all sectors including technology, automotive, and financial services industries
Risks
- This ETF can lose significantly more than the underlying Japanese market due to 2x leverage—a 10% Japan market decline results in approximately 20% fund loss
- Daily rebalancing causes compounding effects that make returns deviate substantially from 2x the index over periods longer than one day
- Currency risk from yen fluctuations against the dollar can impact returns, as Japanese stocks are denominated in yen but fund trades in dollars
Who Should Own This
Designed for sophisticated traders with high risk tolerance seeking short-term (hours to days, maximum weeks) tactical exposure to Japanese market movements. Requires active monitoring and is unsuitable as core holding. Should represent no more than 5-10% of portfolio due to extreme volatility and daily reset mechanics.