An immensely popular ETF that invests in Japan was down over 3% in U.S. trading Monday, falling harder than other Japanese ETFs due to its hedged currency strategy as the yen staged a furious rally against the dollar.

WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) lost 3.4% heading into the closing bell.

CurrencyShares Japanese Yen Trust (NYSEArca: FXY) vaulted 2.3%, a huge move for a currency ETF. FXY saw its heaviest one-day trading volume since February 2012.

DXJ is second on the list of best-selling ETFs so far this year with inflows of $2.6 billion, according to IndexUniverse data. [WisdomTree Japan ETF Creates ‘Windfall’]

The ETF tracks Japanese stocks but hedges its exposure to the yen. It has been a favorite among traders and investors positioning for rising Japanese stocks and a weaker yen following the election of Shinzo Abe as prime minister. Abe is committed to pressuring the Bank of Japan to take further easing measures to weaken the yen. [Japan Currency-Hedged ETF Hauls in Over $2 Billion]

A falling yen has helped DXJ outperform unhedged currency ETFs such as iShares MSCI Japan (NYSEArca: EWJ). However, Monday’s rally in the yen caused DXJ to lose over 3% while EWJ fell 1.3%. In other words, a rising yen provides a tailwind for EWJ.

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