ETF Chart of the Day: Leveraged Dollar ETFs
August 2nd, 2011 at 11:25am by Paul Weisbruch, Street One Financial
Exchange traded funds tracking the dollar have been exceptionally volatile in recent weeks amidst the ongoing debt ceiling dealings in Washington as well as the sheer activity and speculation in other currencies such as the euro, Japanese yen, and Swiss franc, for instance.
Many portfolio managers and investors are aware of PowerShares U.S. Dollar Index Bullish (NYSEArca: UUP) and PowerShares U.S. Dollar Index Bearish (NYSEArca: UDN) as ETF devices that give the investor exposure to movements of the U.S. dollar without the need for a currency futures or options account.
UUP is designed to replicate the returns of a long position in the U.S. dollar against a basket of world currencies including the euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc. [Franc, Yen ETFs Rally on Safe-Haven Status]
On the flipside, UDN replicates the returns of a short position in the U.S. dollar against the aforementioned currencies. Two newer products to the ETF/ETN universe are PowerShares DB 3X Long U.S. Dollar Index Futures ETN (NYSEArca: UUPT) and PowerShares DB 3X Short U.S. Dollar Index Futures ETN (NYSEArca: UDNT), which may be appealing to those portfolio managers looking to aggressively speculate, or potentially hedge, against dollar moves.
These products reset their 3 times leverage factor on a monthly basis and we would expect to see an up-tick in volume in these products as currencies such as the yen and the Swiss franc soar to recent highs, and the euro and the U.S. dollar itself continue to swing wildly with the daily “macro” headlines.
PowerShares DB 3X Long U.S. Dollar Index Futures ETN
Chart source: StockCharts.com.
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