ETF Spotlight: CurrencyShares Mexican Peso Trust (FXM)

September 28th at 7:46am by Tom Lydon

ETF spotlight on the CurrencyShares Mexican Peso Trust (NYSEArca: FXM), part of an ongoing series.

Assets: $21.9 million.

Objective: The CurrencyShares Mexican Peso Trust tries to track the price movement of the Mexican peso against the U.S. dollar.

Holdings: The trust maintains a deposit account denominated in Mexican pesos.

What You Should Know:

  • Rydex|SGI is the sponsor of the ETF. Rydex|SGI is part of Guggenheim Investments. The change in ownership is expected to be completed in the first quarter of 2012 and the Rydex|SGI funds will be rebranded under the Guggenheim name. [Guggenheim, Rydex Merging]
  • FXM has an expense ratio of 0.40%.
  • The fund is down 9.14% over the past month, down 12.12% over the last three months, and down 7.04% year-to-date.
  • Any interest accrued in the deposit account will be used to pay trust expenses, and any excess interest will be distributed to shareholders monthly. The fund has a 12-month yield of 2.21%.
  • For those who want to diversify away from the U.S. dollar and into hard assets, commodities-linked currency, such as the Mexican peso, may be a good play.
  • Mexico is the world’s largest producer of silver, writes Scott Pluschau for TheStreet.

The Latest News:

  • Yields on Mexico’s peso bonds are rising as rising concern over a possible Greek default pushed investors away from high yield emerging markets, report Jonathan J. Levin and Ben Bain for BusinessWeek.
  • “At first the dominant force was growth, or lack of growth, and now it’s the perception that the global financial system could yet again be under serious stress,” Benito Berber, a strategist at Nomura Securities Inc., commented. The turnaround shows “risk associated with what’s happening in Europe.”
  • “This time around, nothing’s been spared from this flight to quality,” Alejandro Urbina, a manager at Silva Capital Management, said. “People are concerned with systemic risk. People are unsure what the impact of a potential messy default in Greece would be and what implication that would have on the international financial system. It’s panic. There is nothing that hasn’t gotten hit, except for Treasuries and the dollar.”
  • Central bank Governor Agustin Carstens believes the Mexican economy will expand 4% this year.
  • Alonso Madero, an asset manager at Corp. Actinver SAB, believes that peso debt is undervalued and yields will begin to drop once Greek default concerns begin to ease.

For past stories in this series, visit our ETF Spotlight category.

Rydex CurrencyShares Mexican Peso Trust

Read the disclaimer; Tom Lydon is a board member of the funds for Rydex|SGI.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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