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Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?

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Designed to provide broad exposure to the Currency ETFs category of the market, the Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) is a smart beta exchange traded fund launched on 02/20/2007.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Invesco, and has been able to amass over $517.22 million, which makes it the largest ETF in the Currency ETFs. UUP seeks to match the performance of the Deutsche Bank Long USD Currency Portfolio Index - Excess Return before fees and expenses.

The Deutsche Bank Long USD Currency Portfolio Index - Excess Return is a rules-based index composed solely of long U.S. Dollar Index futures contracts that trade on the ICE futures exchange.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Operating expenses on an annual basis are 0.76% for this ETF, which makes it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

The top 10 holdings account for about 100.03% of total assets under management.

Performance and Risk

The ETF has added roughly 4% and is down about -0.67% so far this year and in the past one year (as of 11/03/2021), respectively. UUP has traded between $24.09 and $25.37 during this last 52-week period.

The ETF has a beta of -0.11 and standard deviation of 6.62% for the trailing three-year period, making it a medium risk choice in the space. With about 1 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco DB US Dollar Index Bullish ETF is an excellent option for investors seeking to outperform the Currency ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Invesco DB Commodity Index Tracking ETF (DBC - Free Report) tracks DBIQ Optimum Yield Diversified Commodity Index Excess Return and the Invesco Optimum Yield Diversified Commodity Stratgy No K1 ETF (PDBC - Free Report) tracks N/A. Invesco DB Commodity Index Tracking ETF has $2.94 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K1 ETF has $6.93 billion. DBC has an expense ratio of 0.88% and PDBC charges 0.59%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Currency ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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