Yesterday we delved into the Currency ETP space with U.S. Dollar based bull and bear products, and today we take a look at the best performing currency as represented by an ETF, year to date, the Australian Dollar.
Despite impressive performance and a decent surge in trading volume lately, FXA (CurrencyShares Australian Dollar, Expense Ratio 0.40%) has not managed to tack on any new assets yet in 2014, but instead has seen about $53 million trickle out of the fund via redemption activity, giving the fund about $315 million in AUM.
Volatility traders and hedgers alike whom may have or want exposure to the very active as of lately Australian Dollar will likely look to CROC (ProShares UltraShort Australian Dollar, Expense Ratio 0.95%) and GDAY (ProShares Ultra Australian Dollar, Expense Ratio 0.95%), as these funds are designed to deliver two times the daily return of the AUD/USD Cross Rate.
Neither fund is exceptionally large, with CROC holding about $20 million in AUM currently and GDAY only $3.5 million (and much lower average daily trading volume).
We see headlines this morning expressing the disagreement that some market observers have in predicting that the Reserve Bank may raise interest rates in the near term as opposed to in the distant future in reaction to the Australian housing market and other issues. These headlines have sent FXA and the currency itself on a gap lower today (-0.72%) which will perhaps spur additional trading activity in the aforementioned funds.
For those looking for Australian dollar exposure as part of a greater, more diversified currency basket type product, DBV (PowerShares DB G10 Currency Harvest Fund, Expense Ratio 0.75%) comes to mind since it currently has a long position (about 1/3 of the underlying portfolio), invested in the Aussie Dollar.
DBV is a very interesting product in that it invests in G10 currencies as far as its investment universe goes, and according to ETFdb.com “is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates.” In looking at the current positions within DBV, we see bullish Australian Dollar, New Zealand Dollar, and Norwegian Krone, while bearish Swiss Franc, Japanese Yen, and U.S. Dollar.
CurrencyShares Australian Dollar Trust
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.