Investors who put their money in Dejima Capital LLP’s warrant fund have been on a roller coaster ride of late.

The fund, Japan’s best-performing fund for 2015, plunged 25 percent on June 24 when the U.K. voted to leave the European Union, bringing its drop this year to 50 percent. The fund, whose moves amplify the Topix index’s performance, tends to fall about three times more than the benchmark when it declines and gain five to seven times when the index rises, Matthew Lonergan, who runs Japan Synthetic Warrant Fund with Trevor Sliwerski and Rowan Chaplin, said in an interview.

“We’ve got used to huge moves and we try not to get stressed out by them,” said Sliwerski. June was “one of the worst months” in a long time, he said.

Dejima’s fund is among those those that got slammed as volatility spiked globally in the wake of the U.K.’s decision to secede from the EU. Global equities tumbled after the vote, and the pound fell by a record on the day to the lowest in more than three decades. The Topix fell 7.3 percent on June 24, while the Nikkei 225 Stock Average plunged almost 8 percent as the yen strengthened. The Nikkei measure recouped more than half its losses last week as officials from England to Japan indicated they would act to stem the potential fallout.

Market Shocks

The $2.9 trillion hedge fund industry is headed for its worst first-half performance since 2011 as the year has been marked by shocks spurred by China’s currency and stock markets in January, followed by the Bank of Japan’s move to negative interest rates in February and most recently, the Brexit vote.

Dejima’s Japan Synthetic Warrant Fund, with $13.4 million under management, surged 64 percent in 2015, making it the top performer among 79 Japan-focused peers tracked by Eurekahedge Pte. The fund, which controls about $150 million in Japanese convertible bonds, has delivered top returns from a complex strategy of betting on options and bonds that can be converted into equity, often making contrarian wagers on securities that it deems cheap relative to peers. It benefited during last year’s market volatility by buying stocks when investor panic contributed to a selloff.

Despite Friday’s decline, the Dejima fund’s asymmetric risk profile — which means risk and reward is uneven — attracted investors even on the day of the Brexit vote, according to the firm. After the one-day decline, the fund surged 15.3 percent on the Monday following the vote, when the Topix gained 1.8 percent, Sliwerski said.

“With volatility where it is, and the market sort of on its back, the fund presents a decent geared play for investors who know what they are doing,” said Lonergan.

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