Troubles in Greece have only incited the popularity of exchange-traded commodities in the wake of what could be the largest bankruptcy since the credit crunch began.
Often suffering from limited liquidity, currency funds are now on the up and up. The CurrencyShares Euro Trust (FXE: Quote, Profile, Advanced Chart, News), which has an average volume just under 580,000 shares daily, posted volume of over three million shares on February 19, the day Greece’s debt issues came to light. Since that time, the volume has increased over 60%, reaching nearly one million shares daily.
Although overall volume for the 30 different currency ETFs on the market remains thin, a growing number of ETF investors are using exchange-traded currencies as a way to hedge their portfolios. The sector recorded $7 billion in assets under management in February, MarketWatch reports.
As the world economy weakens through nearly two years of recession, China’s stimulus driven economy is exploding in every direction. A growing export economy has exerted a tremendous impact on the boom, which has covered all sectors of the Chinese economy, including real estate.
Chinese exports rose 17.7% year over year against 55.9% growth in exports, Miyanville reports. Both export and import numbers performed well over expectations of 4% and 31% respectively. Analysts now believe the central bank of China will be forced to increase currency rates to encourage a mostly domestic driven economy.
Despite the clear trend in Chinese growth, it is not Chinese ETFs that are attracting investors, but rather gold ETFs. If China revalues the yuan, gold, which is priced in dollars, should rise in value, providing healthy returns to investors. One popular gold fund is the MarketVectors Gold Miners ETF (GDX: Quote, Profile, Advanced Chart, News), which has routinely performed better than the change in market prices for gold.
WisdomTree has filed with the SEC to create two new funds that track the change of the American dollar against a basket of world currencies. The new funds will compete with PowerShares US DB Dollar ETF (UUP: Quote, Profile, Advanced Chart, News), which has attracted more than $3 billion from investors.
The WisdomTree Rising Dollar Fund, one of the new funds, will seek to provide performance equivalent to the change in the value of the US dollar against 15 other world currencies. The fund will invest in Treasury bonds, as well as money markets and currency contracts, to derive returns for its investors.
WisdomTree Commodity Currency Fund will seek out currency investments in countries with strong commodity producing industries. The fund is centered on the relative value of the currencies represented by the following countries: Australia, Brazil, Canada, Chile, Indonesia, Mexico, New Zealand, Norway, Russia and South Africa, according to the SEC filing.
To welcome the New Year, WisdomTree launched the WisdomTree International Hedged Equity ETF (HEDJ: Quote, Profile, Advanced Chart, News) on December 31. The fund will be the first ETF to hedge its own positions against changes in international exchange rates.
Investors have long been plagued with the ties to currency movements, as international stocks usually rise or fall inversely to the change in the US dollar. However, the new WisdomTree fund seeks to perform equally to a broad portfolio of companies in developed markets outside the US with no exposure to changes in the currency market.
Investors who were bearish on the dollar during recession are flocking back into the USD for safety. The PowerShares DB US Dollar Index Bullish Fund (UUP: Quote, Profile, Advanced Chart, News), which tracks twice the daily return of the US Dollar, will have to issue 240 million new shares just to keep up with the incredible demand.
The current currency demand is so strong that the fund was temporarily halted last Friday to avoid any problems with tracking the US dollar, as reported by Reuters. Frequently, when funds run out of shares, the price per share runs higher than the NAV, putting investors in a losing position immediately after the trade is executed.
The index rose 1.6% in the last week alone, and it has gained 4.9% from November 26, when the dollar struck a new low. The 4.9% gain is the biggest move since the dollar rallied for 17 days in February during panic-driven buying. The chart below illustrates UUP’s performance over the past month.
Troubles in Greece have only incited the popularity of exchange-traded commodities in the wake of what could be the largest bankruptcy since the credit crunch began.
As the world economy weakens through nearly two years of recession, China’s stimulus driven economy is exploding in every direction. A growing export economy has exerted a tremendous impact on the boom, which has covered all sectors of the Chinese economy, including real estate.
WisdomTree has filed with the SEC to create two new funds that track the change of the American dollar against a basket of world currencies. The new funds will compete with PowerShares US DB Dollar ETF (UUP: 
To welcome the New Year, WisdomTree launched the WisdomTree International Hedged Equity ETF (HEDJ: 
Investors who were bearish on the dollar during recession are flocking back into the USD for safety. The PowerShares DB US Dollar Index Bullish Fund (UUP: 
Designed by Media Glint Web Software Development
