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Is Invesco DB US Dollar Index Bullish ETF (UUP) a Strong ETF Right Now?

Smart Beta ETF report for UUP

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This story originally appeared on Zacks

The Invesco DB US Dollar Index Bullish ETF (UUP) was launched on 02/20/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Currency ETFs category of the market.

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What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

The fund is managed by Invesco. UUP has been able to amass assets over $688.91 million, making it the largest ETF in the Currency ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Deutsche Bank Long USD Currency Portfolio Index - Excess Return.

The Deutsche Bank Long USD Currency Portfolio Index - Excess Return is a rules-based index composed solely of long U.S. Dollar Index futures contracts that trade on the ICE futures exchange.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Annual operating expenses for UUP are 0.78%, which makes it one of the more expensive products in the space.

The fund has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

Its top 10 holdings account for approximately 100.02% of UUP's total assets under management.

Performance and Risk

Year-to-date, the Invesco DB US Dollar Index Bullish ETF has lost about -0.70% so far, and was up about 4.87% over the last 12 months (as of 01/12/2022). UUP has traded between $24.13 and $25.97 in this past 52-week period.

The ETF has a beta of -0.12 and standard deviation of 6.51% for the trailing three-year period, making it a medium risk choice in the space. With about 1 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco DB US Dollar Index Bullish ETF is an excellent option for investors seeking to outperform the Currency ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Invesco DB Commodity Index Tracking ETF (DBC) tracks DBIQ Optimum Yield Diversified Commodity Index Excess Return and the Invesco Optimum Yield Diversified Commodity Stratgy No K1 ETF (PDBC) tracks N/A. Invesco DB Commodity Index Tracking ETF has $2.83 billion in assets, Invesco Optimum Yield Diversified Commodity Stratgy No K1 ETF has $4.83 billion. DBC has an expense ratio of 0.87% and PDBC charges 0.59%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Currency ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.



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Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports

 

Invesco DB Commodity Index Tracking ETF (DBC): ETF Research Reports

 

Invesco Optimum Yield Diversified Commodity Stratgy No K1 ETF (PDBC): ETF Research Reports

 

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