ProShares, a US-based provider of alternative ETFs, has announced the launch of the ProShares Short Euro ETF (EUFX), the first -1x euro ETF in the United States.
EUFX seeks to provide -1x the daily performance of the US dollar (USD) price of the euro (EUR), before fees and expenses. The ETF has been listed on the NYSE Arca.
“Concerns over Europe have driven nearly $1 billion of assets into our -2x euro ETF, EUO, since its launch less than four years ago,” said Michael L. Sapir, Chairman and CEO of ProShare Advisors, ProShares’ investment advisor. “We are launching EUFX in response to investor requests for an additional variation of an ETF with inverse exposure to the euro.”
The timing of this short euro product looks astute.
According to a recent WSJ article, “Not only are European leaders very publicly failing to produce even a blueprint for saving the single currency in the near term, but now China, which has long been one of the currency’s greatest champions, might just have to pull the plug.”
If China’s economy continues to cool, growth in the country’s foreign exchange reserves will slow, meaning less money to be invested into currencies such as the euro. China has been a big supporter of the euro – selling dollars to buy euros – as it diversifies its reserves away from the US dollar.
In terms of near-term news flow likely to impact the euro, all eyes are on the European Union summit later this week. If, as some investors are expecting, the meeting of EU leaders turns out to be a disappointment, the euro could weaken further
UK and Europe-based investors looking to invest in a similar product to the ProShares offering should consider the following ETCs from ETF Securities:
ETFS Long USD Short EUR (XBJP)
This ETC tracks the MSFX Long US Dollar/Euro Index (TR). The MSFX Long US Dollar/Euro Index (TR) is a total return index, calculated by Morgan Stanley, reflecting the performance of a fully collateralised position in currency forward contracts which are rolled on a daily basis. The index provides long exposure to (i) movements in exchange rates between the local currency (USD) and EUR and (ii) local interest rates – to the extent either are incorporated in forward contract prices. Listed on Xetra, registered for distribution across much of EU (inc UK). UK Fund Reporting tatus. TER 0.39%.
ETFS 3x Short EUR Long USD (SEU3)
Triple (3x) leveraged version of the above. Listed on the London Stock Exchange (LSE), registered for distribution across much of EU (inc UK). UK Fund Reporting status. TER 0.98%.