iShares, the biggest exchange-traded fund company in the world, filed regulatory paperwork this week, putting a total of 14 actively managed currency ETFs into registration that will reflect the value of a number of currencies against the U.S. dollar.
The broad offering, which includes many of the more liquid currency crosses relevant to U.S. investors, reflects an ambitious jump for iShares into this realm. It’s a space dominated by Guggenheim’s CurrencyShares unit, but currency ETFs haven’t garnered dramatic investor interest so far. Still, the extensiveness of the toolbox is hard to ignore, particularly at a time when Guggenheim has shut some of its ETFs.
All the funds will obtain their exposures by owning short-term debt securities denominated in U.S. dollars as well as relevant spot foreign exchange contracts—an approach designed to create “financial exposure substantially similar to” owning a given currency, each fund’s prospectus said.
The planned funds, which already have tickers and proposed annual expense ratios ranging from 0.20 to 0.40 percent, are:
- iShares Australian Dollar ETF (NYSEArca: AUDS), annual expense ratio of 0.20 percent, or $20 for each $10,000 invested
- iShares British Pound ETF (NYSEArca: GBPS), 0.20 percent
- iShares Canadian Dollar ETF (NYSEArca: CADS), 0.20 percent
- iShares Chinese Offshore Renminbi ETF (NYSEArca: CNHS), 0.30 percent
- iShares Euro ETF (NYSEArca: EURS), 0.20 percent
- iShares Japanese Yen ETF (NYSEArca: JPYS), 0.20 percent
- iShares Mexican Peso ETF (NYSEArca: MXNS), 0.40 percent
- iShares New Zealand Dollar ETF (NYSEArca: NZDS), 0.30 percent
- iShares Norwegian Krone ETF (NYSEArca: NOKS), 0.30 percent
- iShares Singapore Dollar ETF (NYSEArca: SGDS), 0.30 percent
- iShares Swedish Krona ETF (NYSEArca: SEKS), 0.30 percent
- iShares Swiss Franc ETF (NYSEArca: CHFS), 0.20 percent
- iShares Thai Offshore Baht ETF (NYSEArca: THBS), 0.40 percent
- iShares Turkish Lira ETF (NYSEArca: TRYS), 0.40 percent
The funds, as noted, will land in a currency ETF market that hasn’t really taken off and, worse yet, has been marked by a number of fund closures this year.
For example, Guggenheim shuttered three currency strategies. Two of the strategies clearly lacked assets, though one focused on the Mexican peso had garnered considerably greater interest. Those funds closures were:
- Guggenheim Yuan Bond ETF (NYSEArca: RMB), shut in May, with $2.61 million in assets
- CurrencyShares Russian Ruble Trust (NYSEArca: FXRU), shut in February, with $5.1 million in assets
- CurrencyShares Mexican Peso Trust (NYSEArca: FXM), also shut in February, with $39 million in assets
Our annual fixed-income conference is coming up in a little more than a week and I can’t wait.
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