Pair of Currency ETPs Debut
February 14, 2013
New launches in the exchange-traded fund (ETF) market are picking up steam. Here’s a quick recap of newly introduced currency funds:
CurrencyShares Singapore Dollar Trust (NYSEARCA:FXSG)
This ETF provides market exposure to the Singapore dollar by holding actual foreign currency deposits, not derivatives or futures contracts.
Singapore, often referred to as the "Switzerland of Asia," is a major banking center that attracts wealth from across the Asia-Pacific due to its independence and solid financial balance sheet. Singapore’s GDP grew 4.9% in 2011 and it’s one of only two Asian-Pacific countries to have AAA credit ratings (Australia is the other) from the major credit rating agencies.
Guggenheim Investments manages FXSG along with the first U.S. listed currency ETP, the CurrencyShares Euro Trust (NYSEARCA:FXE).
FXSG’s annual expense ratio is 0.40%.
PIMCO Foreign Currency Strategy Exchange-Traded Fund (NYSEARCA:FORX)
This is an actively managed ETF that typically invests at least 80% of its assets in currencies or bonds denominated in the currencies of foreign (non-U.S.) countries.
FORX is hardly a pure-play currency ETF. In addition to having the freedom to invest in fixed income instruments, the fund may invest up to 10% of its assets in other ETFs and up to 15% in illiquid securities. Additionally, the fund can engage in short sales and even buy small capitalization and mid-capitalization companies. In many ways, FORX has a liberal investment policy, much like PIMCO Total Return Exchange-Traded Fund (NYSEARCA:BOND)
The "Foreign Currency Strategy” in the Fund’s name refers to the Fund’s proprietary investment strategy of seeking exposure to foreign (non-U.S.) currencies likely to outperform the U.S. dollar over the long-term.
FORX’s portfolio is managed by a team that includes Scott Mather, Vineer Bhansali and Thomas Kressin. Mr. Mather and Dr. Bhansali are both Managing Directors of PIMCO.
FORX charges annual expenses of 0.65%.
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