Currency ETF Palooza

IndexUniverse reported that iShares filed for 14 actively managed, single currency ETFs as follows;

iShares Australian Dollar (AUDS)
iShares British Pound (GBPS)
iShares Canadian Dollar (CADS)
iShares Chinese Offshore Renminbi (CNHS)
iShares Euro (EURS)
iShares Japanese Yen (JPYS)
iShares Mexican Peso (MXNS)
iShares New Zealand Dollar (NZDS)
iShares Norwegian Krone (NOKS)
iShares Singapore Dollar (SGDS)
iShares Swedish Krona (SEKS)
iShares Swiss Franc (THBS)
iShares Thai Offshore Baht (THBS)
iShares Turkish Lira ETF (TRYS)

Obviously there are a lot of other currency ETFs out there. The CurrencyShares suite from Guggenheim is probably the largest offering. WisdomTree and Market Vectors are both in the space along with a few other providers. Several years ago, before the financial crisis, WisdomTree filed most of the above currencies along with quite a few others but brought very few to the market to trade.

The context for actively managed, per the IU article, is that the funds will own short term USD debt and forex contracts and so there will be activity in managing the derivatives used.

The audience for currency ETFs has probably turned out to be smaller than was probably expected back when CurrencyShares Euro (FXE) first hit the market. For the right type of investor I do believe there is room for some currency exposure but to be clear it will not be right for everyone.

It is a little surprising that iShares plans to jump in with such a broad line (if that is their intention and the funds actually do list) but over the years I have been lead to believe that iShares is sensitive to client needs and so if they actually come out with these funds it might be because of client demand. When I say client I don’t mean individuals using some ETFs or even smaller advisors like our firm who might have a few million with them. I’m not sure where this starts, dollar-wise, but it would not surprise me if there is some real demand behind these funds but we’ll see when/if they list.

For the last couple of years the dollar has not been very volatile, trading in a pretty narrow range. In years past there has been a lot more currency volatility than the last two years and that volatility will return at some point but that might not come until after all the central banks are done intervening.

For readers who go way back with this blog I still am intrigued by Nassim Taleb’s (old?) idea of having most of your money in a basket of currencies and then swinging for the fences with a small portion of the portfolio although not intrigued enough to consider actually doing it.

1 Comment

  1. Sounds like legalized gambling to me.


Submit a Comment

Your email address will not be published.

WP-SpamFree by Pole Position Marketing