ETF Spotlight on CurrencyShares Canadian Dollar Trust (NYSEARCA:FXC), part of an ongoing series.
Assets: $1 billion.
Objective: The CurrencyShares Canadian Dollar Trust tries to track the price movement of the Canadian dollar against the U.S. dollar.
Holdings: The trust maintains a deposit account denominated in Canadian dollars.
What You Should Know:
- Rydex|SGI is the sponsor of the ETF.
- FXC has an expense ratio of 0.40%.
- The fund is down 0.42% over the last month, down 0.47% over the past three months and up 1.63% year-to-date.
- Any interest accrued in the deposit account will be used to pay trust expense, and any excess interest will be distributed to shareholders monthly. The fund has a 12-month yield of 0.11%.
- The Canadian dollar is also known as the “loonie” due to the image of the aquatic bird on the Canadian one dollar coin.
- “Those hoping to speculate on the Canadian dollar should be wary, because predicting short-term movements in currencies remains a nearly impossible task that has flummoxed academics and traders for decades,” Morningstar Analyst Michael Rawson warns.
- “Because of the Canadian economy’s heavy reliance on mineral wealth, its currency often rises and falls with commodities,” Rawson added. “Because of the small population of Canada, trade with the United States also represents a sizable portion of economic demand and affects the currency’s movements.”
The Latest News:
- According to the Organization for Economic Cooperation and Development, Canada’s GDP will expand by 1.9% in the third and fourth quarters, according to CTV News.
- Canadian factory sales increased 2.7% in July, more than twice as much as expected, according to Ottawa Citizen.
- Higher-than-forecast purchases of $12 billion in Canadian securities from foreign investors helped the strengthen the Canadian dollar to its highest level in two weeks, reports Chris Fournier for BusinessWeek.
- “The Canadian dollar is one of those which now, more than before, actually benefits from an uncertain risk environment,” Henrik Gullberg, a currency strategist at Deutsche Bank AG, commented. “If you look at fundamentals, they’re reasonably strong. There’s not the same uncertainty surrounding the Canadian system as we’ve seen in the euro zone.”
- ““We’ve seen a lot of uncertainty over the past one or two weeks and that has generated a lot of demand for alternative safe havens,” Gullberg added. “The Canadian dollar is becoming increasingly linked to the U.S. dollar, and therefore to some extent is a safe haven.”
CurrencyShares Canadian Dollar Trust ETF (FXC)
click to enlarge
Read the disclaimer: Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.