WisdomTree Launches Commodity Currency ETF

Steve Dew
September 24, 2010

Actively managed CCX targets the money market rates in commodity-producing countries.

WisdomTree launched a new “commodity currency” fund today that the New York-based sponsor known for its fundamentally weighted products claims is a first for the ETF industry.

The WisdomTree Dreyfus Commodity Currency Fund (NYSEArca: CCX) tracks a basket of eight currencies of emerging as well as developed commodity-producing economies: the Australian dollar, Canadian dollar, Norwegian krone,
New Zealand
dollar, Brazilian real, Chilean peso, Russian ruble and South African rand. The new fund carries an expense ratio of 0.55 percent.

The new commodity currency ETF is the latest product from a fund sponsor that is rapidly building a reputation as the go-to source for emerging market currency exposure. WisdomTree's Dreyfus Emerging Currency Fund (NYSEArca: CEW), which launched in May of last year, has amassed $348 million in assets. CCX is the second launch in as many months for the firm, whose Emerging Markets Local Debt Fund (NYSEArca: ELD) has raked in $252.4 million since it began trading on Aug. 9.

Rick Harper, WisdomTree’s director of fixed income and currency funds, said emerging markets will remain a strategic focus for WisdomTree.

“We really want to own the [emerging markets] curve. We have the short end of the curve with CEW and CCX, and we provide options for investors to go out and add duration to their portfolio with ELD.”

CCX aims to track the money market rates in each of its eight currencies as well as the changes in those rates relative to the U.S. dollar by combining a
cash base with forward currency contracts. Similar to futures, forward contracts are agreements between two parties to buy or sell an asset at a future date.

Harper noted that the fund will not hold the forward contracts to maturity but will roll them over as their maturation dates approach.

Bruce Lavine, WisdomTree’s president and COO, said that CCX is designed to offer investors a way to diversify their currency holdings as well as provide exposure to the commodities space.

“In addition to presenting a distinct alternative to traditional currencies like the euro, yen and pound, exposure to commodity currencies has historically served to diversify a traditional portfolio,” said Lavine in a press release.

The commodity-producing countries in CCX’s basket export nearly everything from milk and mutton to gold, diamonds, silver and oil.

“We took great strides to make sure that each of the commodities groups were touched upon. If you look at the basket, you’ve got a little bit of everything,” said Harper.


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