BetaShares USD ETF

[ruckmauler]

I wonder what you forex mob think of this new USD ETF. I read about it in the Aussie this morning. It is a USD long ETF - no leverage.
http://betashares.com.au/products/name/u-s-dollar-etf/#each-keyFacts

 

[thembi]

Very low cost exposure to the US$ - you're getting wholesale exchange rates and buy/ask spread on market is not more than 10-15bps, so for an unleveraged exposure I can't find anything better.

 

[boofhead]

Seems a few have taken an interest in the last few weeks with AUD getting strong. A month or so there were 900,000 units and now 1,200,000.

 

[robusta]

Sooner or later the printing presses in the US will have to stop and interest rates will have to go up.

 

[thembi]

Exactly - would be good for those who think that the "tide has to turn"....

 

[notting]

USD BetaShares ETF - How do you value it?? Sorry if it's a dumb question

I don't understand how this thing is valued?
It trades like a share yet represents the USD against the AUD.
Today it is trading $9.39 to $9.42 and AUSI$ is 1.0596 against US$
If the AU goes down USD ETF goes up presumably.
Yet how pegged is it? What's the real value?

Personally I think, EURO, POUND, CAD and US are where they should be against Ausi even if interest rates where all equal today. But it just doesn't trade like that.
Ausi will be down by 12months I reckon cause interest rate gap with US will be smaller.

 

[boofhead]

IF you work out the current conversion in the opposite direction, that is USD to AUD you'll find the pricing makes more sense. As the AUD weakens against the USD then the ETF rises in price.

I'm sure there is a PDF on the BetaShares site.

 

[So_Cynical]

I'm sure there is a PDF on the BetaShares site.

Currency ETF's overview http://cms.betashares.com.au/cms-admin/_images/9051783374e156eada0f63.pdf

USD ETF PDS http://cms.betashares.com.au/cms-admin/_images/16835540414d479a9f8d80d.pdf

 

[notting]

Thanks for that input guys. I couldn't find in the pdfs how the thing is valued with a quick look. But I'm hopeless at that.
I also found this:
http://www.betashares.com.au/products/name/u-s-dollar-etf/#each-performance
This appears to show the performance against of the US to AU value since inception.
I presume given the % movements are close enough that the value is pegged somehow at inception.
Value since inception:
USD ETF Fund - -7.02 %
USD Index Vs AU -6.87 %

 

[thembi]

At inception the product was priced so that trading price=US$10 in AUD.

Right now therefore the current trading price is approximately A$9.02 which is very close to the value in AUD of US$10.

Hope that helps

 

[davede]

Thanks for that input guys. I couldn't find in the pdfs how the thing is valued with a quick look. But I'm hopeless at that.
I also found this:
http://www.betashares.com.au/products/name/u-s-dollar-etf/#each-performance
This appears to show the performance against of the US to AU value since inception.
I presume given the % movements are close enough that the value is pegged somehow at inception.
Value since inception:
USD ETF Fund - -7.02 %
USD Index Vs AU -6.87 %

Hi notting,

As an ETF the BetaShares USD ETF is priced just like any other.

The price is determined by the market. An ETF is open ended so that authorised market participants (institutions mainly) can apply for units and redeem them for the underlying. Anyone can see the true value of the underlying portfolio of the ETF i.e. the Net Asset Value (NAV) and can even see it during the day as the ETF trades (the iNav).

Market participants look at the NAV and compared to the price and will buy and redeem or create sell units appropriately to arbitrage out any differences. In the case of the USD ETF I think you can redeem 75K units at a time.

The price can theoretically be anywhere if nobody steps in to arbitrage it.

I ignore the price of the ETF compared to the underlying and simply focus on % changes as the goal of the fund is to track % changes.

Prices can be distorted from the underlying due to fees and income also.

Hope that helps.

 

[Tano]

Its this a good hedge against the falling AUD? im a newbie and want to ensure my upcomming US trip in october wont blow my budget. I have got the travel card but the banks take 400pip spread. I cashed in when AUD was 98c for 94c, then at 97c for 93C. I need another 5-10k USD and currently the banks are offering ~87c.

Else would it be better buying a US index and then cashing out into AUD before the trip. Any ideas?

Positives of USD ETF and US index:
Low Spread

Negative:
100% Tax on capital gains

 

[mullokintyre]

I have started accumulating this ETF as hedge against the next crash.
Its not that i have any faith in the USD (Indeed I have none).
In the past, if I was expecting things to go pear shaped, I would just be buying gold or gold miners (better leverage).
In the past, this has worked well for me personally, but this strategy failed most recently.
But as we saw in the crash during the beginning of the Covid Pandemic, everything gets dumped including gold and gold miners.
I don;'t know whether its because so many are highly leveraged (kinda intuitively correct given the low cost of borrowings), or just plain fear, but everybody went to cash.
Specifically the USD .
This ETF shot to over 17 bucks AUD during the February march 2020 pandemic crash.
I expect the next crash to behave in a similar fashion.
Mick

 

[mullokintyre]

very uncertain about what to do before tomorrows RBA meeting.
If the RBA continues with its nothing doing till 2024 stance, how will the market react?
Will they mark down the AUD vs USD (expected), or buy it up because they think the RBA will be forced into rate rises by the bond vigilantes?
If the RBA changes its no accomodating stance and signals earlier than previously signalled rate increases, will the market send the AUD higher?
Decisions, decisions.
The least risky move is to just sit back and wait and then decide rather than trying to pre empt the market.
Mick

 

[qldfrog]

very uncertain about what to do before tomorrows RBA meeting.
If the RBA continues with its nothing doing till 2024 stance, how will the market react?
Will they mark down the AUD vs USD (expected), or buy it up because they think the RBA will be forced into rate rises by the bond vigilantes?
If the RBA changes its no accomodating stance and signals earlier than previously signalled rate increases, will the market send the AUD higher?
Decisions, decisions.
The least risky move is to just sit back and wait and then decide rather than trying to pre empt the market.
Mick

I want to have a sizeable amount in usd.
that usd etf is a very easy way to do that at low cost of forex
Not that i have much trust in usd which is doomed relatively short medium term, but want diversification and ability to buy assets overseas soon.
But really no clue when to do the aud to usd switch so a little bit here and there.
I did great buying usd when aussie was above 1 usd..but that's history.