For tracking purposes in ETF land we watch FXB (CurrencyShares British Pound Sterling Trust, Expense Ratio 0.40%, $293 million in AUM), which is the largest “British Pound” tracker in the space, having debuted back in 2006.
GBB (iPath GBP/USD Exchange Rate ETN, Expense Ratio 0.40%, $4.3 million in AUM) is considerably smaller in terms of asset size and much less active, but it is the second and only other fund in the space. FXB dipped below a $120 on more than one occasion since the 2016 Brexit, finally bottoming at the very beginning of January of this year before regaining its footing to some extent.
Today we see FXB challenging a multi-month high on another leg-up in the British Pound, and the currency has reversed all of its losses from last October through April of this year inside of the past eight trading sessions, with the momentum beginning before the conclusion of the French elections last week. Perhaps the market is telling us that the “Brexit” itself, which was once viewed as a potential disaster in the making by some observers, is not such a catastrophic thing after all, with the Pound stabilizing and gaining some upside momentum here.
Furthermore, the equity market of the United Kingdom, as represented by EWU (iShares MSCI United Kingdom, Expense Ratio 0.48%), is breaking out this week as well and trading at its highest levels since November of 2015. While the stock market of the U.K. is still measurably trailing the equity market returns of the broader “European Monetary Union” or “Eurozone” segment in general as tracked by EZU (iShares MSCI Eurozone 0.48%, $10.3 billion in AUM), to the tune of over 500 basis points just year-to-date, there does seem to be upward momentum in both the equity market and the currency of the U.K. lately, post Brexit and post the French elections (which most see a LePen win pushing France to an exit of the European Monetary Union as well).
While FXB flows have been mostly stagnant year-to-date, with small outflows of about $12 million, EWU on the other hand has attracted a substantial more than $585 million in new funds via creation in 2017, which makes up a notable portion of its $2.7 billion asset base. Other funds to watch in this space include the $86 million HEWU (iShares Currency Hedged MSCI United Kingdom, Expense Ratio 0.49%) and EWUS (iShares MSCI United Kingdom Small-Cap, Expense Ratio 0.59%), among several other smaller offerings.
The Guggenheim CurrencyShares British (NYSE:FXB) was trading at $125.63 per share on Thursday morning, up $0.39 (+0.31%). Year-to-date, FXB has gained 4.47%, versus a 6.48% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.