ETF Securities Expands Currency Range

The new fund goes 5x short the Swiss franc versus the euro for annual fees of 0.98 percent

Editor, Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

ETF Securities has expanded its currency exchange traded note (ETN) range with the launch of a product that is 5x short the Swiss franc and long the euro.

The ETFS 5x Short CHF Long EUR ETN costs 0.98 percent per year and aims to allow investors to participate in the exchange rate movements of the euro to the Swiss franc, and investors will win or lose five times the direction of the index. It listed on the Deutsche Börse yesterday.

The launch complements the provider’s existing fund range, which includes a fund that goes 5x long the Swiss franc versus the euro for the same annual fee. It was launched in September last year and has gathered around $500,000 in assets. Past returns show the index has generated 145.9 percent in five years.

In our Learn section on our website, it explains: “An ETN is a bank note that trades on an exchange; in exchange for cash the ETN issuer, which is usually a large investment bank, offers investors the returns of an index. Credit risk is significantly greater for ETNs than for other ETP structures as the promise to pay the returns of an index is only as good as the underwriter's ability to pay, meaning that credit risk can be a significant factor for ETNs.”

A spokesperson from ETF Securities responded to clarify that the new fund alters slightly from the traditional structure in that it is an "exchange-traded currency", issued from a standalone special purpose vehicle, and is "fully collateralised".

In March, the provider also brought to market a range of smart beta fixed income ETFs in partnership with active manager Lombard Odier Investment Managers.

Rachael Revesz joined in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.