Seeking Alpha
Registered investment advisor, newsletter provider, ETF investing, medium-term
Profile| Send Message|
( followers)

Americans wishing to trade the U.S./Aussie exchange rate can now use a new leveraged ETF pair from ProShares. ProShares Ultra Australian Dollar (NYSEARCA:GDAY) targets 2x the daily change and ProShares UltraShort Australian Dollar (NYSEARCA:CROC) offers -2x inverse daily exposure to the same benchmark. Both launched on NYSE Arca on 7/19/2012.

ProShares found an unfilled niche with GDAY (GDAY overview) and CROC (CROC overview). They are the first leveraged products based on the Australian Dollar. CROC is the first inverse Aussie Dollar fund, leveraged or not.

Australia’s economy is increasingly tied less to the gasping developed world and more to fast-growing China. A large part of the country’s raw material exports go to China, India, and other Asian markets.

Analysis/Opinion: Access to the Aussie via ProShares carries a steep 0.95% annual expense ratio. Like most leveraged ETFs and ETNs, GDAY and CROC feature a daily leverage reset mechanism. Compounding will cause results over longer periods to vary significantly from the 2x/-2x initial leverage factor. These are trading tools, not long-term investments.

Another factor to consider is that GDAY and CROC will generate a K-1 tax report instead of the more familiar 1099. The ProShares currency ETFs are not registered as investment companies. They are CFTC-regulated commodity pools. This results in a prospectus with plenty of teeth.

Note to ProShares: We love the ticker symbols. G’day, mates.

Disclosure covering writer, editor, and publisher: No positions in any of the securities mentioned. No positions in any of the companies or ETF sponsors mentioned. No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

Source: GDAY, CROC: ProShares Launches A Pair Of Leveraged Currency Funds Down Under