Weak Yen Batters Korean Investors in Yen-Play ETFs

Korean investors in yen-play exchange-traded funds (ETFs) are nursing widening losses as the Japanese currency has fallen to its weakest level in about four decades.

The 'super-weak yen' has had a ripple effect across product types, with even equity ETFs tracking Japan's stock market showing sharp performance gaps depending on whether they hedge currency exposure.

The TIGER Japan Yen Futures ETF returned minus 3.74% year-to-date as of the previous day, and its one-month return was minus 4.47%. The PLUS Japan Yen Ultra-Short-Term Treasury (Synthetic) ETF fell 4.22% over the past month.

Products that also hold U.S. Treasurys fell even more sharply, with the RISE U.S. 30-Year Treasury Yen Exposure (Synthetic H) and the ACE U.S. 30-Year Treasury Yen Exposure Active (H) falling 10.60% and 10.61%, respectively, this year.

Park Sang-hyun, a researcher at iM Securities, said 'there are limits to defending the yen against weakness through market intervention alone.'