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Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?
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Launched on 02/20/2007, the Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Currency ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, UUP has amassed assets over $433.17 million, making it the largest ETF in the Currency ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Deutsche Bank Long USD Currency Portfolio Index - Excess Return.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for UUP are 0.78%, which makes it on par with most peer 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.
When you look at individual holdings, Nybot Finex United States Dollar Index Future-06-17-2024 (DXM4) accounts for about 99.90% of the fund's total assets, followed by United States Treasury Bill-05-30-2024 and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 200.15% of total assets under management.
Performance and Risk
The ETF return is roughly 7.68% so far this year and is up about 3% in the last one year (as of 06/27/2024). In the past 52-week period, it has traded between $26.95 and $30.04.
UUP has a beta of -0.22 and standard deviation of 8.14% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 6 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco DB US Dollar Index Bullish ETF is a reasonable option for investors seeking to outperform the Currency ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
First Trust Global Tactical Commodity Strategy ETF (FTGC - Free Report) tracks N/A and the Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF (PDBC - Free Report) tracks N/A. First Trust Global Tactical Commodity Strategy ETF has $2.39 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $5.11 billion. FTGC has an expense ratio of 1.02% 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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Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?
Launched on 02/20/2007, the Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) is a smart beta exchange traded fund offering broad exposure to the Currency ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, UUP has amassed assets over $433.17 million, making it the largest ETF in the Currency ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Deutsche Bank Long USD Currency Portfolio Index - Excess Return.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for UUP are 0.78%, which makes it on par with most peer 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.
When you look at individual holdings, Nybot Finex United States Dollar Index Future-06-17-2024 (DXM4) accounts for about 99.90% of the fund's total assets, followed by United States Treasury Bill-05-30-2024 and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 200.15% of total assets under management.
Performance and Risk
The ETF return is roughly 7.68% so far this year and is up about 3% in the last one year (as of 06/27/2024). In the past 52-week period, it has traded between $26.95 and $30.04.
UUP has a beta of -0.22 and standard deviation of 8.14% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 6 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco DB US Dollar Index Bullish ETF is a reasonable option for investors seeking to outperform the Currency ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
First Trust Global Tactical Commodity Strategy ETF (FTGC - Free Report) tracks N/A and the Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF (PDBC - Free Report) tracks N/A. First Trust Global Tactical Commodity Strategy ETF has $2.39 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $5.11 billion. FTGC has an expense ratio of 1.02% 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.