Guggenheim Launches Singaporean Dollar ETF

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February 13, 2013
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Guggenheim Partners, the money manager behind the $4 billion S&P 500 Equal Weight ETF (NYSEArca: RSP), today is launching an ETF focused on the Singapore dollar-U.S. dollar currency cross, making it the ninth fund in its CurrencyShares lineup.

The CurrencyShares Singapore Dollar Trust (NYSEArca: FXSG) comes with an annual fee of 0.40 percent, or $40 for each $10,000 invested, that accrues on a daily basis, according to regulatory paperwork Guggenheim filed detailing the fund.

The company noted in the fund prospectus that the trust can be used for expressing a view on the relative strength of weakness of the Singaporean dollar, to help international businesses hedge out currency risks or that it could simply be added to a portfolio to add an asset class with relatively low correlation to other asset classes.

The CurrencyShares Singapore ETF holds actual notes of currency—Singaporean dollars in the case of FXSG—according to the fund prospectus. That differs from other currency ETFs, such as those marketed by WisdomTree that hold assets such as short-term fixed-income securities and currency forwards.

The structure of exposure to currencies matters from a taxation point of view.

Funds like WisdomTree’s are registered under the Investment Company Act of 1940, and are taxed much like equity funds, with the difference of long- and short-term gains based on whether the holding period is less than or more than a year.

Conversely, funds like FXSG are structured as grantor trusts. As such, all such funds are taxed as ordinary income—with a maximum rate of 39.6 percent—regardless of holding period. All these distinctions and more are detailed in IndexUniverse’s “2013 Complete Guide To ETF Taxation.”

As noted, the Singapore ETF is the ninth fund in the CurrencyShares family of funds. The other funds target the following currencies:

  • Australian dollar (NYSEArca: FXA)
  • British pound sterling (NYSEArca: FXB)
  • Canadian dollar (NYSEArca: FXC)
  • Chinese Renminbi (NYSEArca: FXCH)
  • Euro (NYSEArca: FXE)
  • Japanese yen (NYSEArca: FXY)
  • Swedish krona (NYSEArca: FXS)
  • Swiss franc (NYSEArca: FXF)

 

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