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WisdomTree, a leading exchange-traded fund provider and asset manager, is the first to license the index as a benchmark for ETFs.
The Bloomberg US Dollar Index represents developed and emerging market currencies with the most liquidity and the largest US trade flows. The ten currencies represented in the index include many absent from traditional indices, such as leading US trading partners China, South Korea and Mexico, as well as the highly liquid Australian dollar.
Rebalanced annually with data from the Federal Reserve Bank and the Bank of International Settlements, the index provides a dynamic representation of global trade flows and liquidity measures.
Srikant Dash, Head of Bloomberg Indexes, said: “The value of the US dollar against global currencies is a critical metric for traders and investors. For more than 30 years, traditional US dollar benchmarks have been static and tracked against a limited number of developed world currencies. The Bloomberg US Dollar Index is more representative, dynamic and diversified than existing benchmarks, and we are pleased that WisdomTree will be offering exposure to the Index in an ETF structure.”
The index is calculated throughout the trading day using foreign exchange rates generated independently by Bloomberg.
Commenting on the index, Larry Tabb, CEO and Founder of Tabb Group, a financial markets research firm, said: “The non-centralized way currency is traded creates indexing, benchmarking and investing challenges for traders, managers and currency investors. Creating a benchmark index for the dollar allows traders and money managers to benchmark effectively, and currency investors the ability to better understand performance.”
The index is tracked via real-time ticker BBDXY. There is also a total return index (BBDXT) that assumes investment of collateral returns in local markets using one month forward implied yields, and an inverse total return index (BBDXI) that tracks a short position in the US dollar inclusive of funding costs. Real-time index analysis is available to all Bloomberg Professional service subscribers at BDXY <GO>.