We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?
Read MoreHide Full Article
The Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) made its debut on 02/20/2007, and is a smart beta exchange traded fund that provides broad exposure to the Currency ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
Because the fund has amassed over $589.62 million, this makes it the largest ETF in the Currency ETFs. UUP is managed by Invesco. 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for UUP are 0.77%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.82%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 (DXU3) accounts for about 99.95% of the fund's total assets, followed by United States Treasury Bill and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 199.76% of total assets under management.
Performance and Risk
Year-to-date, the Invesco DB US Dollar Index Bullish ETF return is roughly 7.62% so far, and is down about -0.24% over the last 12 months (as of 10/16/2023). UUP has traded between $27.25 and $30.40 in this past 52-week period.
The ETF has a beta of -0.17 and standard deviation of 7.34% for the trailing three-year period, making it 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 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.
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 $2.65 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $5.72 billion. FTGC has an expense ratio of 0.95% 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?
The Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) made its debut on 02/20/2007, and is a smart beta exchange traded fund that provides broad exposure to the Currency ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
Because the fund has amassed over $589.62 million, this makes it the largest ETF in the Currency ETFs. UUP is managed by Invesco. 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for UUP are 0.77%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.82%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 (DXU3) accounts for about 99.95% of the fund's total assets, followed by United States Treasury Bill and Invesco Government & Agency Portfolio (AGPXX).
The top 10 holdings account for about 199.76% of total assets under management.
Performance and Risk
Year-to-date, the Invesco DB US Dollar Index Bullish ETF return is roughly 7.62% so far, and is down about -0.24% over the last 12 months (as of 10/16/2023). UUP has traded between $27.25 and $30.40 in this past 52-week period.
The ETF has a beta of -0.17 and standard deviation of 7.34% for the trailing three-year period, making it 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 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.
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 $2.65 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K-1 ETF has $5.72 billion. FTGC has an expense ratio of 0.95% 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.