A growing number of investors are looking to capitalise on a potential further decline in the Australian dollar, with trading data from BetaShares showing significant inflows into its US Dollar ETF in September.
With the Australian dollar hitting seven month lows against the US dollar, BetaShares has seen approximately AUD30 million of net inflows into the BetaShares US Dollar ETF (USD) since the start of September.
The fund is designed to provide exposure to the performance of the US dollar relative to the Australian dollar, meaning the value of the fund will go up as the US dollar appreciates, and vice versa.
The fund now has over AUD200 million in assets under management.
BetaShares’ managing director Alex Vynokur says the rise in inflows into the USD ETF indicates that many investors expect the Australian dollar to continue its recent decline.
“We are currently seeing a sharp increase in the level of interest in the USD ETF, both in terms of incoming enquiries and net inflows, which seems to reveal an undercurrent of pessimism regarding the Australian dollar,” says Vynokur. “With growing expectations around a potential US interest rate rise, as well as Reserve Bank modelling indicating the AUD is overvalued, investors are taking the opportunity to position themselves to capitalise on a potential long-term decline in the local currency.”