Currency ETC Assets Rise to $49mn

Currency ETC Assets Rise to $49mn and Trading Volumes Soar as Investors Build Long US Dollar Positions and Turn Negative on the Euro as Greek Debt Crisis Worsens…

• Assets rise to over $49 million following successful launch on the LSE
  
• Trading volume reach weekly record, up 240% since start of 2010
  
• 81% of investors currently long USD, with USD strengthening 6.7% since November
  
• ETFS Short EUR Long USD (SEUR) captures 50% of new assets, as investors positions themselves to benefit from the current sovereign debt problems in Greece

London, 02/02/2010 – ETF Securities (ETFS), which launched the world’s largest and Europe’s first platform of Exchange Traded Currencies (Currency ETCs) in November 2009, has seen assets in the platform grow to $49 million since inception with weekly trading volumes continuing their growth, up 240% since the start of 2010.

Currency ETCs which are Long USD and short G10 currencies have seen the most interest from investors, making up 81% of assets. The interest has occurred as the USD strengthened 6.7% versus the Dollar Index (DXY index) since the recent low on 25th November 2009 to 29th January 2010. ETFS Short EUR Long USD (SEUR) has been the most popular trade in 2010, capturing 50% of new assets, while the Australian dollar held the most net long positions. The platform has seen continuous increases in turnover since inception. 80% of trading volumes have occurred in ETCs which are long USD and short G10 currencies, with ETFS Short EUR Long USD (SEUR) taking 21% share of trading volumes, followed by ETFS Short AUD Long USD (SAD) and ETFS Short GBP Long USD (SGBP) with 18% each.

Martin Arnold, Senior Analyst, ETF Securities, commented:

“Sentiment in the foreign exchange market has changed dramatically over the past week as investors increasingly question whether the strong price performance of risk assets in 2009 can be sustained in 2010. The Eurozone is firmly in the spotlight for FX investors, with Greece’s debt problems weighing heavily on the Euro. Monetary tightening in China and India has also been a catalyst for increasing risk aversion. The market pessimism has pushed currency volatilities higher in recent days, and it should come as no surprise that the highest yielding currencies are also under pressure. Investors are not only looking to ETFS Short EUR Long USD (SEUR) to implement ‘safety’ strategies, but are beginning to unwind risk via ETFS Short AUD Long USD (SAD) and ETFS Short NZD Long USD (SNZD)”.

Currency ETCs which were Long USD (except for Japanese Yen) performed best as the USD strengthened. The table below shows the best performing currencies since inception of the Currency ETCs on 12th November 2009 and also the past 12 months. Over the last 12 months, long versions of the higher yielding G-10 currency indices were in the top five performers such as the Australian Dollar and New Zealand Dollar.

Source: ETF Securities, Bloomberg, ¹Currency ETC returns from 12/11/2009 to 29/01/2010, ²Returns from 30/01/2009 to 29/01/2010 are simulated from MSFX Currency Indices and do not include the impact of fees.

Currency ETCs provide long or short passive exposure to G10 currencies versus the US Dollar and include AUD, CAD, CHF, EUR, GBP, JPY, NOK, NZK and SEK. Currency ETCs also provide exposure to local interest rates in addition to FX movements. For example the implied interest rate incorporated into the MSFX Long Australian Dollar Index^SM averaged approximately 5% p.a. over the past five years.

Source:ETFWorld – ETFSecurities