iShares Crafts Actively Managed Currency ETFs

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 |  Includes: AUDS, CADS, CHFS, CNHS, EURS, GBPS, JPYS, MXNS, NOKS, NZDS, SEKS, SGDS, THBS, TRYS
by: Tom Lydon

BlackRock iShares plans to get into the currency game, filing to launch a suite of actively managed foreign currency-related exchange traded funds.

According to an SEC filing, iShares wants to market 14 active currency ETFs:

  • iShares Australian Dollar ETF (Pending:AUDS): 0.20% expense ratio
  • iShares British Pound ETF (Pending:GBPS): 0.20% expense ratio
  • iShares Canadian Dollar ETF (Pending:CADS): 0.20% expense ratio
  • iShares Chinese Offshore Renminbi ETF (Pending:CNHS): 0.30% expense ratio
  • iShares Euro ETF (Pending:EURS): 0.20% expense ratio
  • iShares Japanese Yen ETF (Pending:JPYS): 0.20% expense ratio
  • iShares Mexican Peso ETF (Pending:MXNS): 0.40% expense ratio
  • iShares New Zealand Dollar ETF (Pending:NZDS): 0.30% expense ratio
  • iShares Norwegian Krone ETF (Pending:NOKS): 0.30% expense ratio
  • iShares Singapore Dollar ETF (Pending:SGDS): 0.30% expense ratio
  • iShares Swedish Krona ETF (Pending:SEKS): 0.30% expense ratio
  • iShares Swiss Franc ETF (Pending:CHFS): 0.20% expense ratio
  • iShares Thai Offshore Baht ETF (Pending:THBS): 0.40% expense ratio
  • iShares Turkish Lira ETF (Pending:TRYS): 0.40% expense ratio

The ETFs will hold short-term debt denominated in U.S. dollars and spot foreign exchange contracts to provide financial exposure similar to purchasing the respective foreign currency, reflecting the fluctuations in the exchange rate of the foreign currency to the USD.

"We think they are poised to receive greater investor attention now that ETF industry leader iShares plans to expand into the investment style," Todd Rosenbluth, S&P Capital IQ Director of ETF Research, said in a research note.

Currency ETFs have not taken off as they hold about $3.3 billion in assets, or less than 1% of total ETF assets under management.

A number of these iShares currency ETFs will be directly competing against the Guggenheim Investment CurrencyShares suite of currency ETFs, which include exposure to the Australian dollar, British pound sterling, Canadian dollar, Chinese renminbi, euro, Japanese yen, Singapore dollar, Swedish krona and Swiss franc.

Additionally, WisdomTree offers currency related ETFs tied to the Chinese yuan, Brazilian real, Indian rupee and two currency baskets.

PowerShares offers the widely observed U.S. dollar ETF along with a currency basket ETF.

"We think the role that currency ETFs can play in a client's portfolio is multi-fold, offering hedging exposure to equity investments or a tactical trade to where economic policies are seen as favorable," Rosenbluth added.

Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.