ASX Currency ETFs: AUD/USD ETF, AUD/GBP ETF, AUD/EUR ETF
Know your investment. Become an ETF master – check out our comprehensive guide to ETFs trading on the ASX.
Currently there are 3 currency ETFs trading on the ASX – all listed recently in 2011 and all provided by BetaShares.
|ETF Name||Benchmark||ASX Code||MER (%)||Date Listed|
|BetaShares U.S Dollar ETF||US.Dollar||USD||0.45||Feb-11|
|BetaShares British Pound ETF||British Pounds||POU||0.45||Jul-11|
|BetaShares Euro ETF||Euros||EEU||0.45||Jul-11|
You can see a full list of ETFs trading on the ASX here.
What do currency ETFs aim to do?
Currency ETFs aim to track the change in value of one currency against another.
Why use currency ETFs?
Ok so you’ve got a view that AUD/USD, AUD/GBP or AUD/EUR is going to fall or rise, or maybe you just want to hedge your overall portfolio. Why use currency ETFs instead of traditional FX products?
Easy to access
The main reason investors use currency ETFs over traditional FX products is because they are easy to access for retail investors. ETFs trade just like shares and so can be purchased through discount share brokers. Some brokers may also offer margin lending over currency ETFs allowing for leveraged positions.
Investing in a currency ETF will almost certainly provide greater returns than going out to a
How does a currency ETF work?
A currency ETF operates just like other ETFs. The fund is open ended and holds an underlying portfolio that tracks the benchmark. Confused? For a more detailed and easy to understand explanation check out How does an ETF work?
The difference with currency ETFs is that the ETF provider (BetaShares is the only currency ETF in Australia currently) intends to ‘invest primarily in bank deposit accounts denominated in’ whichever currency.
Do currency ETFs pay any dividends?
They can. As currency ETFs hold cash in bank deposit accounts they receive a rate of interest on their deposits. They also may realise foreign currency gains or losses when changing positions. In the event that the interest or other income earned is more than the fees and expenses of the fund the income will be converted into AUD and distributed to unit holders at least annually.
What determines the price of the currency ETF?
Currency ETF prices are determined in exactly the same way that regular ETF prices are determined – by the market. There is a constant arbitrage process that ensures the value of the underlying portfolio is reflected in price. Check out our How ETF Prices Are Determined guide for a more detailed explanation.