BetaShares Capital Limited yesterday listed two more currency ETFs on the Australian Securities Exchange (ASX).
Trading under the ASX Codes ‘POU’ and ‘EEU’, BetaShares British Pound ETF and BetaShares Euro ETF track the performance of the British Pound (GBP £) and the Euro (€) relative to the Australian dollar (A$).
The new ETFs employ the same simple, transparent and highly cost-effective structure of the BetaShares US Dollar ETF, which has been one of the most successful ETF launches in Australia since its introduction in February this year. The assets of the new funds consist of British Pounds or Euros held on deposit with JPMorgan Chase Bank.
The launch comes at a time of historic strength in the A$, which recently hit a 26 year high against the British Pound. The local currency is also at close to 20 year highs against the Euro.
The ETFs should appeal to investors looking for a simple way to capitalise on any potential weakening in the A$ relative to either currency. For example, if the British Pound goes up 10% against the A$ (i.e., if the A$ falls in value), the value of the ETF should go up 10% too (before fees and expenses).
At inception, each unit of the ETF is equivalent to £10 (for POU) or €10 (for EEU), expressed in Australian dollars (less management fee). So an investor seeking an exposure of £1,000 would simply buy 100 units of POU through their stockbroker or online broker.
BetaShares’ analysis shows that investors who purchased British Pounds or Euros via a major bank would pay fees and expenses that equate to well over 10 times the cost of using the ETFs (assuming a $10,000 exposure over six months). For investors looking for unleveraged exposure to these currencies in a cost effective and simple manner, the ETFs are a very attractive solution.
The new BetaShares currency ETFs provide investors with the ability to access GBP and Euros via a simple trade on the ASX, just like any share, allowing them to take a view on either currency.