ETF full name: Invesco CurrencyShares Euro Trust
ETF provider: Invesco
FXE key details
|Inception date||December 9, 2005|
|Average Daily $ Volume||$8.41 million|
|Benchmark||EUR/USD Spot Exchange|
|Net Assets under Management||$286.41 million|
About the FXE ETF
Before the Christmas holidays of December 2005, investors got an early gift in the form of Invesco CurrencyShares Euro Trust Fund, FXE-precisely on the 9th of December.
The FXE fund, since its inception, provides eurozone and American investors, primarily, an avenue to hedge against currency exposure and an opportunity to bet against the green-buck. It is thus a non-diversified fund comprising a single currency, the Swiss franc-national currency of Switzerland.
This forex ETF average 60-day spread since inception is 0.01%.
FXE fact-set analytics insight
The objective of the Invesco CurrencyShares Euro Trust Fund is to track the performance of the euro after expenses. The FXE, therefore, seeks to reflect the value of the most popular reserve currency globally, after the dollar, the euro.
To effectively realize the goal mentioned earlier, the FXE directly holds euros, the official currency of the eurozone, in a deposit account, which allows for closer tracking of the EUR/USD spot exchange.
However, the FXE deposit account has the following limitations:
- Non-insured deposit, which effectively increases the account’s deposit risk.
- Increased holding cost due to taxation at nominal income rates for distributions and share sales, regardless of the holding period.
- Unlike its benchmark spot exchange, the FXE has no provision for overnight lending rates.
The fund has a positive correlation to the euro. It increases in value on the decline of the green-buck and slides on the dollar’s value rise.
FXE annual performance analysis
Despite the Coronavirus ravaging some major European economies and the Brexit saga, the Invesco CurrencyShares Euro Trust Fund held an annual return of 11.39%. This return is highly attributable to the US economy taking a bigger hit from Covid19 than the compounded effect of the virus on the eurozone and the uncertainty surrounding the US elections.
However, the FXE has been on the back foot for the better part of 2021 due to the US economy resurgence riding piggyback on widespread vaccination and the resumption of some economic activity normalcy.
FXE ETF boasts $286.41 million in assets under management.
FXE ETF RATING
IPO ESG Rating
FXE key holdings
The Invesco Currency Euro Trust is a single currency ETF. It, therefore, has no underlying holdings like other funds but rather a single physical currency held in a deposit account, the euro.
Thus, the FXE tracks the EUR/USD performance, giving the investors a cost-efficient and relatively lower risk of investing in the complex forex market. Funds held in the deposit account utilization is in options trading, futures contracts trading, and index swaps.
While still in the red, year-to-date, the chart shows a market re-correction of the FXE with the prices flirting with the year open level, which is a significant resistance level. A look at the corresponding EUR/USD spot exchange reveals a similar setup.
According to data from IHS Markit on PMI, the eurozone demand for goods and services is up by approximately 58.4%, which is the sharpest rise in rate for the last 15 years. Thus, the FXE is in a strategic position being the Eurozone primary currency, to cash in on this post-pandemic economic growth and attain new heights.