Currency ETF Chart of the Day: Euro

ETF Trends

With the Euro currency trading at its lowest levels since early December of last year — FXE (CurrencyShares Euro, Expense Ratio 0.40%) is trading at $128.48 after reaching as high as $136.03 in late January — the space has surprisingly been quiet in terms of linked ETF activity.

FXE for example net asset flows this year are a modest +$45 million, and the asset base of the fund remains rather small ($258 million) given what one would think the popularity of such a product would be given the timeliness of the Euro story and for hedging reasons.

Interestingly, the largest ETF in terms of assets in the Euro currency space is a leveraged product as opposed to a long only unlevered product, with that fund being EUO (ProShares UltraShort Euro, Expense Ratio 0.95%), which has more than $520 million in AUM.

From conversations with portfolio managers over the last 3-5 years, the desire for “unleveraged short/inverse/bear exposure to the Euro” is unquestionably “in the market’s appetite” and there is now an ETF product that delivers such exposure.

EUFX (ProShares Short Euro, Expense Ratio 0.95%) delivers unleveraged inverse exposure to the Euro currency and the fund debuted in June of last year. Judging by the very small asset base ($3.8 million currently) and lethargic average daily trading volume (1,716 shares), we can only assume that institutional and RIA ETF managers whom are looking to hedge out Euro exposure if not directionally speculate, are simply not aware of this fund’s presence in the marketplace yet.

In fact, there have been several days where the fund has not traded any volume in a session, which is quite rare considering that this is not necessarily an esoteric or a niche fund by design.

The reality is that this happens in ETF marketing and distribution, and some fund managers require a certain amount of time to elapse as far as “live index track record” before they will consider a product for investment.

There has been a decent uptick in trading volume recently in EUFX in the past two weeks and perhaps as the Euro remains in daily headlines, interest will continue to grow in this product, as well as related ETFs that are focused in this currency space.

ProShares Short Euro

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short-euro-etf

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

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