The Euro ETF (FXE) Ride Has Been Anything But Smooth For Investors

“An exchange-traded fund launched in late 2005 designed to track the movement of the euro against the dollar has come nearly full circle, but the ride has been anything but smooth for investors. CurrencyShares Euro Trust  (NYSE:FXE) is off nearly 20% from its 52-week high of $151.27 it set in November 2009. With more than $600 million in net assets, the fund is the largest and oldest ETF following the euro,” John Spence Reports From The Wall Street Journal.

Spence goes on to say, “When it was listed in December 2005, it began trading around $120 a share. Nearly five years later, it has taken investors on an unsettling round trip. CurrencyShares Euro Trust, which is sponsored by investment manager Rydex SGI, bottomed out at $121.27 a share on May 18. And the pain may still not be over. The European currency has come under intense selling pressure in 2010 as debt fears like Greece’s spread the risk of contagion infecting the Continent. Investors are also worried that austerity measures to cut deficits may result in further economic weakness. There are even predictions the euro may soon hit parity with the dollar.”

“CurrencyShares Euro Trust is listed on the NYSE Arca and levies annual operating expenses of 0.4% of assets. The ETF is often used to hedge a portfolio’s dollar exposure, or to speculate on currency movements—a notoriously risky activity. The ETF’s prospectus warns the dollar-euro rate, “like foreign exchange rates in general, can be volatile and difficult to predict.” A glance at the fund’s five-year chart should be another risk tip-off,” Spence Reports.

Jerome Abernathy, director of research at Rydex SGI, said there are “signs of cracks developing” in the European Community with Greece and other countries such as Spain and Italy seeing debt rise to dangerous levels of GDP. “Europe is in a real crisis here. People are starting to realize the emperor has no clothes,” Mr. Abernathy said in a telephone interview. “Could we see the euro go to parity with the U.S. dollar? Certainly, and we could go lower in my opinion.”

Here are some more details we put together on the CurrencyShares Euro Trust ETF (NYSE:FXE) below:

CurrencyShares Euro Trust ETF (NYSE:FXE)

Shares of the Trust are called “CurrencyShares Euro Trust” and trade under the ticker symbol FXE. CurrencyShares Euro Trust track the price of the euro.

Chart forCurrencyShares Euro Trust (FXE)

Leave a Reply

Your email address will not be published. Required fields are marked *