ASX code:
ZUSD
ETFS Physical US Dollar ETF
The intelligent alternative
The Exchange
Traded Fund with
real currency
The intelligent alternative
What is ETFS Physical US Dollar ETF?
At a glance
Helping you hedge
Benchmark
USD/AUD Exchange Rate
Management fee
0.30%
Exposure
US Dollar
ASX code
ZUSD
Reflecting Australia’s status as a major global commodity
producer and exporter, the Australian Dollar has historically
been highly correlated with commodity price movements.
With most commodity prices being denominated in US
Dollar, commodity prices have historically moved inversely to
the US Dollar, because a rising US Dollar makes commodities
more expensive for foreign investors.
As a result, Australian investors can seek to offset the threat
of declining commodity prices on their underlying holdings
of resources companies by taking US Dollar exposure. In this
way, taking a long US Dollar position can provide a partial
hedge of an underlying portfolio of commodity equities and
commodities.
The ETFS Physical US Dollar ETF (ASX code: ZUSD)
provides investors with exposure to the performance of the
US Dollar against the Australian Dollar.
ZUSD invests in bank deposits denominated in US Dollars,
with any interest earned distributed to investors*.
It can be traded by investors on the Australian Securities
Exchange (ASX) just like a share, and is settled and held in
normal brokerage accounts. No units can be issued until the
USD is delivered to the deposit bank.
* There is no guarantee that any interest will be earned or distributed
to investors.
Currency ETF
FX Deposit
FX Futures/Options
Simplicity
Yes
All currency ETFs can be
traded like a share in normal
brokerage accounts
No
No
Requires margin management
Each currency requires a new
account and conversion is subject to and risk monitoring
the provider’s requirements
Costs
Low
Management Fees,
Commissions
High
High spreads, Account fees
Low
Commissions
Margin Call
No
No
Yes
For futures and sellers of options
Minimum Investment No
1 ETF unit
(When traded on an exchange)
Yes
Varies with banks, typically
A$10,000
Yes
Initial margin for futures and
sellers of options
Maximum Loss
The initial invested amount
The initial invested amount
May lose more than the initial
invested amount
SMSF Eligible
Yes
Yes
Potentially Approval is subject to
many restrictions
The intelligent alternative
Historical performance vs commodities
0
0.2
200
0.4
150
0.6
100
AUD/USD
Bloomberg Commodities Index
250
0.8
50
1.0
0
Dec 06
Dec 07
Dec 08
Dec 09
Dec 10
Bloomberg Commodities Index
Dec 11
Dec 12
Dec 13
Dec 14
Dec 15
1.2
Dec 16
AUD/USD
Source: Bloomberg
Historical performance vs commodity equities
8000
0
0.2
6000
0.4
5000
0.6
4000
3000
0.8
2000
1.0
1000
0
Dec 06
Dec 07
Dec 08
Dec 09
S&P/ASX 300 Resources Index
Source: Bloomberg
Dec 10
Dec 11
AUD/USD
Dec 12
Dec 13
Dec 14
Dec 15
1.2
Dec 16
AUD/USD
S&P/ASX 300 resources index
7000
Page 6
Key benefits
Risk factors
Pure US Dollar exposure
An investment in the units involves a significant degree of
risk. The following are just some of the risk factors which
should be carefully considered by prospective investors before
deciding whether to invest in the Units. Specific risks relating
to the Fund are set out in the relevant Product Disclosure
Statement.
With ZUSD, investors get exposure to the performance of
the US Dollar against the Australian Dollar and key macroeconomic themes in the US.
Diversification tool
Currency exposures allow investors to diversify
their portfolios.
Liquidity
The liquidity of its underlying assets determines an ETF’s
liquidity. As ZUSD invests US Dollars, the most liquid
currency in the world, it is expected to trade with strong
liquidity.
Cost-effective
At 0.30% per annum, ZUSD is a cost-effective way to access
the market compared with foreign currency accounts that
often include fees for transactions.
Past performance is not an indication of future performance
and the investment performance of the
Units could be volatile.
Factors affecting the performance of the US Dollar may
adversely affect the value of Units including market risk,
volatility, government policy and intervention, or interest rate
risk. In recent years, rates of exchange between currencies
have become more volatile and this volatility may continue in
the future.
The ETF holds US Dollars in a bank deposit with ANZ.
An investment in the US Dollar via ZUSD will expose
investors to risks inherent in holding the exposure via
an ETF. These include, among others:
Easy to access
Market Risk
Security
Like shares, ZUSD is traded on the ASX throughout the day
using normal brokerage accounts, and there is no need to
open a foreign exchange (FX) account to access US Dollars.
ETFs aim to replicate the price movements of their
underlying benchmark or asset so their performance is
dependent on the performance of the underlying currency.
No minimum investment requirement
Tax
Unlike currency accounts with banks and trading platforms,
you can invest in any amount from one ETF unit.
Maximum loss capped
Margin calls do not apply to an ETF, and the most an investor
can lose is the total value of their investment.
Transparent
The FX rate, interest rate, costs and valuation are
publicly available.
As with the majority of investments, ETFs will normally
incur some form of taxation. Each investor should obtain
independent tax advice.
Costs
All ETFs incur costs, whether internal costs (related to the
product) or external costs (incurred in trading the product).
Liquidity Risk
Although the Units will be quoted on the ASX there is no
guarantee that there will be a liquid market for the Units.
Furthermore, in certain circumstances the ASX may suspend
trading of the Units or delist a Fund. There are also certain
circumstances where the Responsible Entity may limit, reject,
scale, or delay redemptions.
Talk to us today about diversifying your portfolio
To request more information about our products or research:
www.etfsecurities.com.au
+61 2 8937 7245
[email protected]
Level 8, 242 Pitt Street, Sydney NSW 2000
Important Information
This document is communicated by ETFS Management (AUS) Limited (“ETFS”) (Australian Financial Services Licence Number 466778). This document may not be reproduced, distributed or
published by any recipient for any purpose. Under no circumstances is this document to be used or considered as an offer to sell, or a solicitation of an offer to buy, any securities, investments or
other financial instruments and any investments should only be made on the basis of the relevant product disclosure statement which should be considered by any potential investor including
any risks identified therein.
This document does not take into account your personal needs and financial circumstances. You should seek independent financial, legal, tax and other relevant advice having regard to your
particular circumstances. Although we use reasonable efforts to obtain reliable, comprehensive information, we make no representation and give no warranty that it is accurate or complete.
Investments in any product issued by ETFS are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither ETFS, ETF Securities Limited
nor any other member of the ETF Securities Group guarantees the performance of any products issued by ETFS or the repayment of capital or any particular rate of return therefrom.
The value or return of an investment will fluctuate and investor may lose some or all of their investment. Past performance is not an indication of future performance.
ETF Securities Australia
Level 8, 242 Pitt Street,
Sydney NSW 2000,
Australia
t +61 (2) 8937 7245
e [email protected]
w etfsecurities.com.au