As of now, currency ETF investing remains somewhat underappreciated by most. The space has just over three dozen funds, and a paltry amount in assets across all of the products in the segment.
This is starting to slowly change though, as more ETF providers have sought to launch new funds in the segment with some decent success. In fact, 11 currency ETFs have at least $100 million in assets while another five have at least $50 million under management, suggesting a decent level of interest in some corners of the space.
However, the vast majority of the capital currently invested in the space flows through into just a handful of G-10 currencies. These include widely-traded ones like the dollar, euro, yen, and the pound, which make up the vast majority of the current forex ETF market.
Beyond that, the currency ETF space has also moved beyond the G-10 and into other big economies and their currencies. These include Australia (FXA) and China (CYB and CNY), and now thanks to CurrencyShares, Singapore as well (read Can Anything Stop These Southeast Asia ETFs?).
CurrencyShares, a segment of Guggenheim Investments, has just debuted America’s first ETF that focuses on the Singaporean dollar, the Singapore Dollar Trust (:FXSG). The product looks to track the price of the Singaporean dollar, net of expenses, which come to 40 basis points a year.
FXSG/Singaporean Dollar in Focus
The ETF looks to provide long exposure to the Singaporean dollar, appreciating when the currency goes up against the U.S. dollar, and down when Singapore’s dollar declines against the American currency.
The currency is controlled by the Monetary Authority of Singapore (MAS), the nation’s central bank. This government authority has the ability to regulate all elements of the country’s monetary, financial, and banking programs.
The nation doesn’t utilize a pure free-float currency system though, as the MAS allows the Singaporean dollar to float in an undisclosed band against a secret basket of the country’s major trading partners. This is important for a small country that must import many natural resources, while it also helps to keep exports competitive against many of its main rivals in the region.
Singaporean Market
While Singapore is often overlooked by U.S. investors in favor of other markets in the region, the country, and its currency, are vital to Southeast Asia. Singapore represents the business heart of the region, and it is one of the most impressive growth stories over the past 50 years (read 5 ETFs for Countries with Highest Employment Rates).