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Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?
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The Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) was launched on 02/20/2007, and is a smart beta exchange traded fund designed to offer 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $299.61 million, which makes it one of the larger ETFs in the Currency ETFs. UUP, before fees and expenses, 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
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 UUP, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 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.
When you look at individual holdings, Nybot Finex United States Dollar Index Future-12-16-2024 (DXZ4) accounts for about 100.91% of the fund's total assets, followed by United States Treasury Bill-11-29-2024 (912797HP5) and Invesco Government & Agency Portfolio (AGPXX).
Its top 10 holdings account for approximately 200.45% of UUP's total assets under management.
Performance and Risk
So far this year, UUP has added about 7.86%, and is down about -2.11% in the last one year (as of 10/31/2024). 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 8.19% 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 $2.20 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?
The Invesco DB US Dollar Index Bullish ETF (UUP - Free Report) was launched on 02/20/2007, and is a smart beta exchange traded fund designed to offer 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $299.61 million, which makes it one of the larger ETFs in the Currency ETFs. UUP, before fees and expenses, 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
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 UUP, making it one of the more expensive products in the space.
It's 12-month trailing dividend yield comes in at 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.
When you look at individual holdings, Nybot Finex United States Dollar Index Future-12-16-2024 (DXZ4) accounts for about 100.91% of the fund's total assets, followed by United States Treasury Bill-11-29-2024 (912797HP5) and Invesco Government & Agency Portfolio (AGPXX).
Its top 10 holdings account for approximately 200.45% of UUP's total assets under management.
Performance and Risk
So far this year, UUP has added about 7.86%, and is down about -2.11% in the last one year (as of 10/31/2024). 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 8.19% 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 $2.20 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.