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Portfolio > ETFs

Dollar ETNs Unveiled

By Ron DeLegge

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Deutsche Bank and Invesco PowerShares Capital Management launched two new exchange-traded notes, which are designed to provide triple long and triple short exposure to futures contracts on the US Dollar Index (USDX).

“These ETNs provide investors additional ways to express a view on the U.S. dollar,” says Martin Kremenstein, a director at Deutsche Bank.

The PowerShares DB 3x Long U.S. Dollar Index Futures ETNs (UUPT) aims for triple monthly performance of the U.S. Dollar Index plus the return on 3-month Treasury Bills.

The PowerShares DB 3x Short US Dollar Index Futures ETNs (UDNT) shoots for triple inverse monthly performance to the U.S. Dollar Index plus the return on 3-month Treasury Bills.  

The U.S. Dollar index is designed to reflect the value of the US dollar compared to a global basket of currencies that includes the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

The new dollar ETNs expand upon Deutsche Bank’s other related products like the PowerShares DB US Dollar Bullish Fund (UUP) and PowerShares DB US Dollar Bearish Fund (UDN). Both are exchange traded funds that track the performance of the dollar, but unlike the DB 3x Dollar ETNs, they don’t have leveraged exposure to the USDX.

The 3x Dollar ETNs are senior unsecured obligations issued by Deutsche Bank AG, London Branch and they carry issuer credit risk.

Investors can buy and sell the ETNs on the NYSE Arca exchange or receive a cash payment at the scheduled maturity or early redemption based on the performance of the index less investor fees. The maturity date for both DB notes is on June 30, 2031.

The issuer has the right to redeem the ETNs at the repurchase value at any time. Investors may redeem the ETNs in blocks of no less than 200,000 securities and multiples of 50,000 securities thereafter. Redemptions may include a fee of up to $0.03 per security.

Both dollar ETNs charge annual fees of 0.95 percent and leverage is reset on a monthly basis.

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