Currency traders may now hedge their positions with the new ProShares leveraged and inverse Australian dollar exchange traded funds.
GDAY tries to reflect twice, or 200%, the daily performance of the U.S. dollar price of the Australian dollar by holding AUD/US dollar futures. The ETF has an expense ratio of 0.95%.
CROC tries to reflect twice the inverse, or -200%, the daily performance of the U.S. dollar price of the Australian dollar by holding AUD/US dollar futures. The ETF has an expense ratio of 0.95%.
It should be noted that as leveraged or "geared" products, the two funds are meant to reflect their stated objective for a single trading day. Additionally, due to compounding issues, the returns over periods of more than one day may differ from the target return, and the divergences may be even more pronounced over periods of extreme volatility.
"The Australian dollar is one of the world's most actively traded currencies," Michael L. Sapir, Chairman and CEO of ProShare Capital Management, said in the press release. "We are pleased to offer investors additional ways to manage risk or potentially take advantage of moves in this widely followed currency market."
Alternatively, investors may choose to go with the simple long Guggenheim CurrencyShares Australian Dollar Trust ETF (FXA), which has a 0.40% expense ratio. However, FXA acts as a Trust that tracks the price of the Australian dollar through a deposit account denominated in Australian dollars. This fund does not use derivatives to achieve its target objective.
Read the disclaimer: Tom Lydon is a board member of the funds for Guggenheim Investments.
Max Chen contributed to this article.