ProShares Launches Geared Aussie Dollar ETFs

by on July 20, 2012 | ETFs Mentioned:

In yet another first for the ETF industry, ProShares announced this week the introduction of a pair of products that will offer leveraged exposure to the exchange rate between two of the world’s most heavily traded currencies. The new ETFs will offer access to the AUD / USD exchange rate, amplifying swings in the value of the Australian dollar. The new ETFs are: 

  • ProShares UltraShort Australian Dollar (CROC)
  • ProShares Ultra Australian Dollar (GDAY)

CROC will seek to deliver -2x daily returns to the AUD/USD cross rate, while GDAY will offer 2x leveraged daily exposure to the same benchmark [see 46 Amusing ETF Tickers]. 

Aussie Dollar In Focus

The Australian dollar has been the target of significant flows in recent years, thanks in large part to Australia’s distinction as one of the first developed markets to raise interest rates after the global recession. Australia’s benchmark interest rate is currently at about 3.5%, well above similar rates in the U.S. and Europe [see also 17 ETFs For Day Traders]. 

Thanks in part to that attractive yield, the Australian dollar has surged higher over the past few years. The CurrencyShares Australian Dollar Trust (FXA, which has about $600 million in assets), has climbed by about 42% over the past three years thanks to strong demand for the currency and a prolonged commodity rally. More recently, the Aussie dollar has been on a winning streak as well; it recently hit a new 11-week high against the greenback [see also King Dollar ETFdb Portfolio]. 

“The Australian dollar is one of the world’s most actively traded currencies,” said Michael L. Sapir, Chairman and CEO of ProShare Capital Management, the sponsor of the funds. “We are pleased to offer investors additional ways to manage risk or potentially take advantage of moves in this widely followed currency market.”

Leveraged Currency ETFs

The launch of CROC and GDAY expands the small but growing lineup of leveraged currency ETPs. Other leveraged currency plays include: 

Disclosure: No positions at time of writing.