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Currency ETC assets rise to USD49m

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ETF Securities has seen assets in its exchange-traded currencies platform grow to USD49m since inception in November 2009 with weekly trading volumes continuing their growth, up 240 per cent since the start of 2010.

Currency ETCs which are long USD and short G10 currencies have seen the most interest from investors, making up 81 per cent of assets.

The interest has occurred as the USD strengthened 6.7 per cent versus the Dollar Index since the recent low on 25 November 2009 to 29 January 2010.

ETFS Short EUR Long USD has been the most popular trade in 2010, capturing 50 per cent of new assets, while the Australian dollar held the most net long positions.

The platform has seen continuous increases in turnover since inception. Eighty per cent of trading volumes have occurred in ETCs which are long USD and short G10 currencies, with ETFS Short EUR Long USD taking 21 per cent share of trading volumes, followed by ETFS Short AUD Long USD and ETFS Short GBP Long USD with 18 per cent each.

Martin Arnold, senior analyst, ETF Securities, says: “Sentiment in the foreign exchange market has changed dramatically over the past week as investors increasingly question whether the strong price performance of risk assets in 2009 can be sustained in 2010. The Eurozone is firmly in the spotlight for FX investors, with Greece’s debt problems weighing heavily on the Euro. Monetary tightening in China and India has also been a catalyst for increasing risk aversion. The market pessimism has pushed currency volatilities higher in recent days, and it should come as no surprise that the highest yielding currencies are also under pressure.”

Currency ETCs which were long USD (except for Japanese Yen) performed best as the USD strengthened.

Over the last 12 months, long versions of the higher yielding G10 currency indices were in the top five performers such as the Australian Dollar and New Zealand Dollar.

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