Rise of Japan Stocks Yields More Complex Investments

Convention dictates investors become more uneasy as the structure of their investments gets more complex. In Japan, the opposite may now be the case.

April sales of so-called uridashi bonds tied to two or more equities were the second highest on record for any month according to data compiled by Bloomberg going back to 1997. Most of the securities — investments targeted at Japanese households — are linked to the Nikkei 225 Stock Average and another gauge such as the Standard & Poor’s 500 Index.

The Nikkei’s climb above 20,000 for the first time in 15 years last month and the S&P 500’s ascent to a record have increased investor concern the market is overheated and may reverse course. According to Credit Suisse Group AG, the Nikkei gains have seen more people put their money into contracts that start losing money when at least one of the multiple gauges they’re tied to drops below preset levels. Those levels are generally lower than for notes tied to single indexes.