The WisdomTree Dreyfus Chinese Yuan Fund (NYSEArca: CYB), Market Vectors Chinese Renminbi ETN (NYSEArca: CNY) and the CurrencyShares Chinese Renminbi Trust (NYSEArca: FXCH) have been decent performers among currency exchange traded funds, but investors should be careful if betting those good times will persist.
Investors should also be mindful of the fact that some well-known members of the smart money crowd are eagerly betting against the Chinese currency. Kyle Bass’s Hayman Capital Management has sold off the bulk of its investments in stocks, commodities and bonds so it can focus on shorting Asian currencies, including the yuan and Hong Kong dollar,” according to MarketWatch.
David Einhorn’s Greenlight Capital, Stanley Druckenmiller and hedge-fund manager David Tepper are among the big names on Wall Street that are yuan bears.
“What’s more, it’s unclear whether bearish yuan trades will turn into the big money-makers that many funds are now counting on. The yuan has rebounded 1.1 percent from this year’s closing low on Jan. 8, with policy makers saying there’s no basis for another sharp depreciation,” reports Saijel Kishan for Bloomberg.
CNY, an exchange traded note, follows price movements between the yuan and USD. This note is open to credit risk and uses rolling, three-month currency futures contracts to provide exposure to the exchange rate of the Chinese yuan to the U.S. dollar.