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Currencies – The Most Under-Offered Asset Class In The ETP Landscape

|Includes: iPath GEMS Asia-8 ETN (AYT), BZF, CCX, CEW, CNY, CROC, CYB, DBV, DRR, ERO, EUFX, EUO, FORX, FXA, FXB, FXC, FXCH, FXE, FXF, FXS, FXSG, FXY, GBB, ICI, ICN, INR, JEM, JYN, PGD, UDN, ULE, URR, USDU, UUP, YCL, YCS

FX Metrix, LLC Research - 16 December 2015

www.fx-metrix.com

Over recent years, exchange traded products (ETPs) including ETFs and the like have become one of the most popular investment vehicles for both retail and institutional investors. With over $1 trillion in assets under management in ETPs, one might think the market has no more opportunities for product innovation. However with regards to currencies, it is quite the opposite.

FX Metrix Research has found that there is an underwhelming representation of ETPs in currencies compared to other asset classes in the ETP landscape. Meaning, there is a place for new and innovative investment products that give investors diversified exposure to otherwise unoffered markets.

As seen below, compared to other asset classes, there are relatively few offerings for investors in the currency landscape according to data from ETFdb2. With only 36 offerings in currencies compared to 1,201 offerings in equities - the imbalance is clear. There are over 33 times more ETP offerings in the equities asset class than currencies despite currencies being the largest asset class with respects to volume2.

ETP Offerings by Asset Class

Offerings

Currencies

Equities

Bonds

Commodities

Vanilla ETPs

24*

977

250

91

2x Leveraged ETPs

7*

91

10

18

3x Leveraged ETPs

0

58

11

8

Inverse ETPs

5*

75

24

18

Total ETPs

36*

1,201

295

135

Looking at the data, we see that there is a lack of leveraged as well as inverse ETP offerings in the currency asset class. Despite seven 2x leveraged offerings in the currency category, there are currently no ETPs that offer investors 3x leverage. Lastly, the number of inverse offerings available to investors in the currency space is very limited. As seen above, the asset class with the lowest number of inverse as well as total offerings is currencies.

This shows that despite the growth of the ETP market to over $1 trillion in the last 20 years, there is still opportunity for more growth and innovation. At FX Metrix, we focus on building currency-based indices to be used in various applications throughout the financial world. We look forward to helping fill this gap in the ETP landscape to offer investors increased variety as well as unique exposure.

To learn more about FX Metrix or to join our newsletter, please visit our website at www.fx-metrix.com.

1 ETFdb.com provides information on ETF investing. For more information, visit www.ETFdb.com.

2 The 2013 Triennial Central Bank Survey conducted by the Bank for International Settlements estimates global FX market activity to be $5.3 trillion per day. For the full report, visit www.bis.org/publ/rpfx13fx.pdf.

* The Currency ETPs included are AYT, BZF, CCX, CEW, CNY, CROC, CYB, DBV, DRR, ERO, EUFX, EUO, FORX, FXA, FXB, FXC, FXCH, FXE, FXF, FXS, FXSG, FXY, GBB, ICI, ICN, INR, JEM, JYN, PGD, UDN, ULE, URR, USDU, UUP, YCL, YCS

This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions of FX Metrix, LLC as of the date appearing in this material only and are subject to change without notice.

For more information about FX Metrix and our newsletters, visit us at fx-metrix.com.

FX Metrix, LLC

Supporting Documents

  1. 2015.12.16_Currencies_Under-Offered.pdf
  2. rpfx13fx.pdf

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.