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What Are The Prospects For CYB Going Forward?

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Nexus Research


  • The CYB ETF has declined by about 8.60% since April 2018.
  • The recent truce announced in the US-China trade war has helped lift the Yuan, however it could prove to be temporary.
  • The Chinese economy continues to weaken, which will encourage further dovish monetary policy from the PBOC, and weigh down the CYB ETF.

The WisdomTree Chinese Yuan Strategy ETF (NYSEARCA:CYB), which tracks the Chinese Yuan against the US Dollar, has declined by about 8.60% since April 2018. The main reason behind this slide has been the ongoing trade tensions between the US and China. Nevertheless, the ETF has actually rallied over the past week by about 1.80%, mainly due to the US Fed striking a more dovish tone towards monetary policy, which led to the USD weakening against the Chinese Yuan. Recent positive developments the US-China trade war could also provide support for the Yuan. However, this article assesses whether the rally is sustainable.

Source: Yahoo Finance

Prospectus Review:

The investment seeks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese yuan relative to the U.S. dollar. The fund normally invests at least 80% of its net assets, plus the amount of any borrowings for investment purposes, in investments whose combined performance is economically tied to China. It is an actively managed exchange traded fund. The fund generally will maintain weighted average portfolio maturity of 90 days or less with respect to the money market securities in its portfolio. The annual net expense ratio of the ETF is 0.45%

Source: wisdomtree.com

Risk Note: Investors should be aware of the possible contango effect risk regarding such derivative-based ETFs. The risk occurs during rollover periods. If the price of forward contracts (which the fund will purchase and roll into) is higher than the spot price (which is usually the approximate forward price of the existing forwards that the fund will be selling out of), then the ETF investors will incur a loss as result of the transaction.

The reason I have distinctively chosen this ETF is because according to data from

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Striving to uncover long-term investment opportunities (10+ years) through in-depth research and analysis. Nexus Research seeks to evaluate and compare business strategies to determine a company’s potential for market penetration, revenue growth and profit margin expansion. During market downturns, stocks often become cheap very fast, creating various investment opportunities at once. Amid such circumstances, investors often lack the time to research a company thoroughly before making investment decisions, out of fear that they will miss out on attractive entry points. Therefore, Nexus Research not only uncovers present-day buying opportunities, but also offers extensive insights on solid companies with promising growth potential despite expensive valuations, thereby allowing investors to be ready and make well-informed investment decisions when the stock becomes more reasonably valued.

Analyst’s Disclosure: I/we 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 (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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