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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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $305.42 million, making it one of the larger ETFs 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.78% for this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Nybot Finex United States Dollar Index Future-09-16-2024 (DXU4) accounts for about 95.70% of the fund's total assets, followed by United States Treasury Bill-11-29-2024 (912797HP5) and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 196.25% of total assets under management.
Performance and Risk
So far this year, UUP return is roughly 3.43%, and is down about -3.41% in the last one year (as of 08/27/2024). During this past 52-week period, the fund has traded between $26.95 and $30.04.
UUP has a beta of -0.22 and standard deviation of 8.18% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 5 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 $2.22 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $4.53 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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $305.42 million, making it one of the larger ETFs 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.78% for this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Nybot Finex United States Dollar Index Future-09-16-2024 (DXU4) accounts for about 95.70% of the fund's total assets, followed by United States Treasury Bill-11-29-2024 (912797HP5) and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 196.25% of total assets under management.
Performance and Risk
So far this year, UUP return is roughly 3.43%, and is down about -3.41% in the last one year (as of 08/27/2024). During this past 52-week period, the fund has traded between $26.95 and $30.04.
UUP has a beta of -0.22 and standard deviation of 8.18% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 5 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 $2.22 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $4.53 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.