ETF Spotlight: CurrencyShares British Pound Sterling Trust

Aug.22.11 | About: CurrencyShares British (FXB)
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ETF Spotlight on CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), part of an ongoing series.

Assets: $98.1 million.

Objective: The CurrencyShares British Pound Sterling Trust tries to reflect the price movements of the British pound against the U.S. dollar.

Holdings: The trust holds a deposit account denominated in British pound sterling.

What You Should Know:

  • Rydex|SGI sponsors the FXB fund.
  • FXB has an expense ratio of 0.40%.
  • The fund has gained 2.85% over the past month, increased by 2.14% over the last three months and rose 5.26% year-to-date.
  • Interest earned by the trust will be used to pay expenses, and any left over will be distributed to share holders on a monthly basis.
  • “Predicting short-term movements in currencies remains a nearly impossible task that has flummoxed academics and traders for decades,” warns Morningstar analyst Michael Rawson.
  • “In the long term, two major factors tend to drive currency movements: relative growth of monetary bases (the number of dollars or pounds in the economy) and relative growth of the underlying economies using that currency,” Rawson added.

The Latest News:

  • The pound sterling, among other foreign currencies, has been rallying on growing safe-haven interest, reports Nicholas Hastings at WSJ.com. The sterling has attracted unusually high inflows as concern over the global economy mounts and no immediate solution has been proposed on the Eurozone crisis.
  • “It indicates that over the longer term, many of these currencies could increasingly become to be seen as the safe havens that the major currencies so manifestly are not,” commented Simon Derrick, senior currency strategist at the Bank of New York Mellon Corp.
  • The British currency has been bolstered in the wake of the U.S. debt downgrade by the S&P, stagnate growth in Germany and talks about a reversal in the European Central Bank’s decision to raise rates, despite negative news over the U.K. economy, including rising unemployment, lower retail sales and higher inflation.

Rydex CurrencyShares British Pound Sterling Trust

Read Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.