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2009 an Extremely Strong Year for High-yield and Commodity Currency ETCs with ETFS Long AUD Topping Performance, up 32%
13/01/10
- Carry trade strategies are back on investor radars as high-yielding currencies dominated performance on the ETF Securities’ Currency ETC platform;
- ETFS Long AUD Short USD (LAUD) surged 32%, ending 2009 as the best performing Currency ETC. LAUD has significantly outperformed other asset classes over the past 3 and 5 years, up over 30% and nearly 50%, respectively;
- Commodity currencies generated impressive returns in 2009, with the MSFXSM Indices tracking commodity currencies outperforming MSFXSM non commodity currency indices by an average of over 20 percentage points;
- Investors have embraced currency investment via ETCs, driving AUM on the Currency ETC platform to nearly $50mn;
- Although the global economic outlook remains mixed, the flexibility of the ETFS Currency ETC platform allows investors to implement a range of views by investing in a choice of 18 long and short Currency ETCs;
The Australian Dollar emerged from 2009 as the strongest performer on ETF Securities’ Currency ETC platform, with the ETFS Long AUD Short USD (LAUD) surging over 32%, driven by investors’ renewed search for yield and a renewed appetite for commodity-related investments. The index return also incorporates an implicit interest rate return. Over 2009, investors in LAUD would have earned an implied interest return of 3.25%*, significantly better than the return of a typical local at-call bank deposit account. Australian Dollar ETCs accounted for nearly 25% of the volume traded on the Currency ETC platform since inception. The MSFXSM Long New Zealand Dollar Index followed closely behind, generating a solid return of 29%, with an implied interest return of around 2.5%*.
Currencies were one of the top performing asset classes over the past three and five years - the MSFXSM Long Australian Dollar Index returned a striking 31%* over three years and 47% over five years. A comparison with other asset classes shows how attractive an FX investment can be: the MSFXSM Long Australian Dollar Index outperformed both the S&P500 and the DJ STOXX 50 equity indices by around 47 percentage points over the past three years. Over the past five years, the MSFXSM Long Australian Dollar Index outperformed the S&P500 and the DJ STOXX 50 equity indices by around 45 percentage points and 32 percentage points, respectively.
During 2009, commodity currencies performed remarkably well. The MSFXSM G10 Currency Indices that track commodity related currencies outperformed the other MSFXSM G10 Currency Indices by over 20 percentage points last year. The top four performing G10 currencies over 2009 had solid economic ties to commodity markets. In particular, the MSFXSM Long Norwegian Krone Index and the MSFXSM Long Canadian Dollar Index posted strong returns of 22% and 17%, respectively, as crude oil rallied 78% last year.
ETF Securities, which listed Europe’s first and the world’s largest Currency ETC platform in 2009, saw trading volumes in long and short Australian Dollar (LAUD;SAD), New Zealand Dollar (LNZD;SNZD), Canadian Dollar (LCAD;SCAD) and Norwegian Krone (LNOK;SNOK) ETCs contribute 40% of the volume traded on the ETFS Currency ETC platform in 2009, as investors increasingly used these ETCs to implement their trading strategies.
At the other end of the scale, the Yen fell against the US dollar last year as investors preferred higher yielding currencies, driving the MSFXSM Short Japanese Yen Index up by 2% in 2009 and by nearly 8% in December alone. ETFS Short JPY Long USD (SJPY) is currently the most popular Currency ETC, accounting for 42% of assets under management at the end of 2009.
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Returns* |
| 1Yr |
3Yr |
5Yr |
| MSFX Total Return Indices |
| Long Euro Index (TR) |
3.1% |
15.3% |
17.4% |
| Long Japanese Yen Index (TR) |
-3.1% |
26.4% |
8.9% |
| Long Norwegian Krone Index (TR) |
22.2% |
18.7% |
20.8% |
| Long Swedish Krona Index (TR) |
9.1% |
1.7% |
1.7% |
| Long British Pound Index (TR) |
11.1% |
-10.1% |
0.2% |
| Long Swiss Franc Index (TR) |
3.1% |
20.0% |
13.8% |
| Long Australian Dollar Index (TR) |
32.0% |
31.1% |
47.3% |
| Long Canadian Dollar Index (TR) |
16.5% |
17.8% |
29.2% |
| Long New Zealand Dollar Index (TR) |
29.0% |
21.9% |
36.9% |
| Average Long |
13.7% |
15.9% |
19.6% |
| Short Euro Index (TR) |
-4.2% |
-6.7% |
5.4% |
| Short Japanese Yen Index (TR) |
1.6% |
-15.0% |
13.4% |
| Short Norwegian Krone Index (TR) |
-20.4% |
-12.1% |
-1.7% |
| Short Swedish Krona Index (TR) |
-12.0% |
1.8% |
16.2% |
| Short British Pound Index (TR) |
-11.9% |
18.4% |
22.2% |
| Short Swiss Franc Index (TR) |
-4.3% |
-10.2% |
8.5% |
| Short Australian Dollar Index (TR) |
-26.4% |
-23.6% |
-21.9% |
| Short Canadian Dollar Index (TR) |
-16.4% |
-10.7% |
-6.0% |
| Short New Zealand Dollar Index (TR) |
-25.3% |
-16.6% |
-15.5% |
| Average Short |
-13.3% |
-8.3% |
2.3% |
| Equity Indices |
| FTSE 100 |
41.1% |
-19.2% |
14.1% |
| Dow Jones STOXX 50 |
32.2% |
-15.6% |
15.8% |
| S&P 500 |
26.5% |
-15.9% |
2.1% |
*Returns are in USD to 31 December 09 from: 31 December 04 (5 Yrs), 31 December 06 (3 Yrs), 31 December 08 (1 Yr).
The first 18 Currency ETCs listed on the London Stock Exchange (LSE) on the 12th November 2009 track recently launched MSFX Currency IndicesSM. The initial Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. The ETCs also provide exposure to local interest rates in addition to spot FX movements between the relevant Currency and US Dollars. The new Currency ETCs are fully collateralised in order to mitigate counter-party risk and listed on the ETC segment of the LSE. Similar to Exchange Traded Funds (ETFs), ETCs are liquid, accessible and simple. ETCs can be created and redeemed on a continuous basis by market makers, matching the tremendous liquidity of the underlying foreign exchange markets but traded on a regulated exchange in the same way as an equity.
Martin Arnold, Senior Analyst, commenting on 2009 performance said:
“Investors in commodity-linked currencies were the big winners in 2009, as the global economy rebounded and commodity prices surged. On a longer-term view, emerging markets will likely continue to drive demand for raw materials and that should be supportive of ETCs tracking commodity currencies like Australian Dollar and Norwegian Krone. However, high performing G10 currencies will need to sustain the pace of growth to continue their upward trajectory. Elsewhere in the G10 group, there are plenty of risk factors that FX investors need to keep a close eye on: sovereign credit ratings will remain an issue in 2010 and the questions of ‘how and when’ the withdrawal of public stimulus measures, which have been extremely supportive of global growth in 2009, occurs. Currency ETCS allow investors a simple and secure way to implement a range of different investment or macroeconomic views. More recently, we have seen a strong pick-up of activity in our Long USD ETCs, indicating some investors may be building positions to hedge against a possible risk asset correction.
For further information, please contact:
Helen Burden
Tel: +44 (0) 20 7448 4330
Email: helen.burden@etfsecurities.com
Notes to Editors:
ETF Securities is a provider of Exchange Traded Commodities (Commodity ETCs), Exchange Traded Currencies (Currency ETCs) and 3rd generation Exchange Traded Funds (ETFs). The management of ETF Securities pioneered the development of ETCs, with the world's first listing of an ETC, Gold Bullion Securities in Australia and London in 2003, and then the world's first ETC platform which was first listed on the London Stock Exchange in September 2006.
ETFS Exchange Traded Products (ETPs) provide investors with a wide variety of investment strategies, with ETPs offering exposure to resource equities, physical, long, forward, leveraged and short exposure to all commodity sectors and G10 Currencies.
ETPs are simple to access as they are traded in up to five currencies (EUR, USD, GBP, AUD and JPY) and listed on up to nine major exchanges globally including the London Stock Exchange, the New York Stock Exchange, the Tokyo Stock Exchange, NYSE-Euronext Paris, NYSE-Euronext Amsterdam, Deutsche Börse, Borsa Italiana, the Australian Securities Exchange and the Irish Stock Exchange.
*ETFS Currency ETCs began trading on 12 November 2009 and track the MSFX IndicesSM. All returns indicating an investment return timeframe beginning prior to November 2009 have been simulated according to the MSFX Index methodology.
Conference Call:
Access the Global FX Market with Currency ETCs
Date: Tuesday 19th January 2009
Time: 11:00am and 3:00pm London Time
Speaker: Scott Thompson, Head of Sales, UK & Ireland, ETF Securities Ltd
This call will discuss:
- New Currency ETCs & MSFXSM Currency Indices
- Investment Case for Currencies
- Currencies as an Asset Class
- Low Correlation Provides Diversification Benefits
- Low Volatility Boosts Risk-Adjusted Returns
- Implement Strategic & Tactical Views with Currencies
- Liquidity Model & Pricing
To register your place today: www.etfsecurities.com/en/events/etfs_events_calls.asp
To learn more about ETF Securities go to: www.etfsecurities.com
Disclaimer:
This press release does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities (together the "Securities") of ETFS Foreign Exchange Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited or ETFS Oil Securities Limited or any shares (the "Shares") of ETFS Fund Company public limited company (the "Fund") or any other shares or securities, nor shall it or any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto. Any offer, invitation or solicitation shall be made solely by means of the relevant prospectus (plus any supplements thereto) in the case of the Securities or the prospectus together with the relevant sub-fund supplement in the case of the Shares (in each case the "Prospectus") and recipients of this advertisement who are considering a purchase of Securities or Shares following distribution of the Prospectus are reminded that any such purchase should be made solely on the basis of the information contained in such Prospectus. This advertisement does not constitute any recommendation regarding the Securities or the Shares. The communication of this press release is not being made by, and this press release has not been approved by, an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000 (the "FSMA"). Accordingly this press release is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of this press release or any other document issued in connection with the offer and sale of the Shares or Securities is only being made to and directed at those persons in the United Kingdom falling within the definition of Investment Professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), or high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order or any person to whom it may otherwise lawfully be made (all such persons together being referred to as "relevant persons"). The communication of this press release (or any other document issued in connection with the offer and sale of the Shares or Securities) must not be acted upon or relied upon by persons who are not relevant persons. The Fund is a collective investment scheme for the purposes of the FSMA and is a recognised scheme for the purposes of the FSMA. Persons distributing this press release must satisfy themselves that it is lawful to do so. All applicable provisions of the FSMA must be complied with in respect of anything done in relation to the Shares or Securities in, from or otherwise involving the United Kingdom. Collateralised currency securities are complex, structured products involving a significant degree of risk and are not suitable or appropriate for all types of investor. They are aimed at sophisticated, professional and institutional investors and any other person wishing to invest must seek appropriate financial, tax and other advice from independent financial advisors with appropriate regulatory authorisation and qualifications.
This is not an offer of securities for sale in the United States. The Shares and Securities have not been and will not be registered under the US Securities Act or any other applicable law of the United States. The Shares and Securities are being offered and sold only outside the United States to non-US persons in reliance on the exemption from registration provided by Regulation S of the US Securities Act. None of ETFS Foreign Exchange Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited and ETFS Fund Company public limited company (each an "Issuer") has been or intends to become registered as an investment company under the United States Investment Company Act of 1940 (as amended) (the "Investment Company Act") and related rules. Neither the Shares nor the Securities or any beneficial interest therein may be reoffered, resold, pledged or otherwise transferred in the United States or to US persons. If an Issuer determines that any holder of shares is a US Person or any holder of Securities is a Prohibited US Person (being a US Person who is not a "qualified purchaser" as defined in the Investment Company Act), the Issuer may redeem the Shares or Securities (as the case may be) held by that Security Holder in accordance with the provisions described in the Prospectus. Neither the Shares nor the Securities may be purchased with plan assets of any "employee benefit plan" within the meaning of section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA"), any "plan" described in section 4975(e)(1) of the United States Internal Revenue Code of 1986, as amended (the "Code") or any entity whose underlying assets include "plan assets" of any of the foregoing by reason of an employee benefit plan's or other plan's investment in such entity, which employee benefit plan, plan or entity is subject to Title I of ERISA or section 4975 of the Code or any United States Federal, state, or local law or non-United States law that is substantially similar to the prohibited transaction provisions of section 406 of ERISA or section 4975 of the Code (any such employee benefit plan, plan or entity, a "Prohibited Benefit Plan Investor"). If the Issuer determines that any Security Holder is a Prohibited Benefit Plan Investor, the Issuer may redeem the Securities or Shares held by that person in accordance with the provisions described in the relevant Prospectus.
Index disclaimer: The Morgan Stanley Indices are the exclusive property of Morgan Stanley & Co. Incorporated (“Morgan Stanley”). Morgan Stanley and the Morgan Stanley index names are service mark(s) of Morgan Stanley or its affiliates and have been licensed for use for certain purposes by the Issuer and ETF Securities Limited. The financial securities referred to herein are not sponsored, endorsed, or promoted by Morgan Stanley, and Morgan Stanley bears no liability with respect to any such financial securities. The Prospectus contains a more detailed description of the limited relationship Morgan Stanley has with the Issuer and any related financial securities. No purchaser, seller or holder of this product, or any other person or entity, should use or refer to any Morgan Stanley trade name, trademark or service mark to sponsor, endorse, market or promote this product without first contacting Morgan Stanley to determine whether Morgan Stanley’s permission is required. Under no circumstances may any person or entity claim any affiliation with Morgan Stanley without the prior written permission of Morgan Stanley.
ETF Securities Limited, ETFS Foreign Exchange Limited, ETFS Commodity Securities Limited, ETFS Metal Securities Limited, ETFS Oil Securities Limited, and Gold Bullion Securities Limited are each regulated by the Jersey Financial Services Commission. ETFS Fund Company PLC is regulated by the Financial Regulator in Ireland.
Please visit ETF Securities website for prospectus www.etfsecurities.com
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