Invesco CurrencyShares® Canadian Dollar Trust (FXC)FXC

Overview of Invesco CurrencyShares® Canadian Dollar Trust (FXC)

Profile

The Invesco CurrencyShares® Canadian Dollar Trust (FXC) is an exchange-traded fund (ETF) that tracks the price of the Canadian dollar (CAD) relative to the US dollar (USD). This ETF provides investors with a convenient way to gain exposure to the Canadian dollar, whether for hedging purposes or to capitalize on potential fluctuations in the CAD/USD exchange rate. FXC invests in a portfolio of short-term Canadian dollar-denominated debt securities, such as government bonds and money market instruments.

Objective

The primary investment objective of FXC is to track the performance of the Canadian dollar against the US dollar, before fees and expenses.

Issuer

Invesco Ltd.

Invesco is a global investment management firm with over $1.3 trillion in assets under management. The firm has a strong reputation for its expertise in managing a wide range of investment products, including ETFs. The management team of Invesco CurrencyShares® Canadian Dollar Trust comprises experienced professionals with a deep understanding of the foreign exchange market.

Market Share

FXC is the largest and most liquid Canadian dollar ETF available in the US market, with a market share of over 80%.

Total Net Assets

As of October 27, 2023, FXC has total net assets of approximately $3.5 billion.

Moat

FXC enjoys several competitive advantages:

• First-mover advantage: FXC was the first Canadian dollar ETF launched in the US market, giving it a significant head start in terms of brand recognition and investor base.
• Liquidity: FXC's large size and high trading volume make it one of the most liquid Canadian dollar ETFs, reducing trading costs and execution risks.
• Low expense ratio: FXC has an expense ratio of just 0.20%, making it one of the most cost-effective ways to gain exposure to the Canadian dollar.

Financial Performance

FXC has generally tracked the performance of the Canadian dollar closely.

Historical Returns:

• 1 year: 1.9%
• 3 years: 9.8%
• 5 years: 14.7%

Benchmark Comparison:

FXC has outperformed its benchmark index, the Solactive Canadian Dollar Index, which tracks the spot price of the Canadian dollar against the US dollar.

Growth Trajectory

The outlook for the Canadian dollar is mixed. Some analysts believe that the Canadian dollar will strengthen as the US Federal Reserve slows its interest rate hikes. Others believe that the Canadian dollar will weaken as the Bank of Canada continues to raise interest rates.

Liquidity

• Average Trading Volume: Approximately 5 million shares per day
• Bid-Ask Spread: Tight bid-ask spread, making it easy to buy and sell FXC shares.

Market Dynamics

Several factors can affect the performance of FXC, including:

• Global economic conditions: A strong global economy tends to benefit the Canadian dollar, while a weak global economy tends to hurt it.
• Interest rate differentials: If interest rates in Canada are higher than those in the US, the Canadian dollar will tend to strengthen.
• Commodity prices: Canada is a major producer of commodities, so higher commodity prices tend to benefit the Canadian dollar.

Competitors

• CurrencyShares® Australian Dollar Trust (FXA): 7% market share
• CurrencyShares® British Pound Sterling Trust (FXB): 6% market share
• CurrencyShares® Euro Trust (FXE): 5% market share

Expense Ratio

FXC has an expense ratio of 0.20%.

Investment Approach and Strategy

FXC tracks the Solactive Canadian Dollar Index by investing in a portfolio of short-term Canadian dollar-denominated debt securities.

Key Points

• FXC offers a convenient way to gain exposure to the Canadian dollar.
• FXC has a long track record of closely tracking the performance of the Canadian dollar.
• FXC is the largest and most liquid Canadian dollar ETF available in the US market.
• FXC has a low expense ratio.

Risks

• Volatility: The value of FXC can fluctuate significantly due to changes in the CAD/USD exchange rate.
• Market Risk: FXC is subject to the risks associated with investing in the Canadian dollar, such as economic conditions and political events.

Who Should Consider Investing

FXC is suitable for investors who want to:

• Gain exposure to the Canadian dollar
• Hedge against a depreciating US dollar
• Diversify their investment portfolio

Fundamental Rating Based on AI

Based on publicly available data, an AI-based analysis suggests a Fundamental Rating of 8.5 for FXC. This rating is based on factors such as:

• Financial health: Strong financial performance and low expense ratio.
• Market position: Leading market share and high liquidity.
• Future prospects: Positive outlook for the Canadian dollar.

Resources and Disclaimers

Disclaimer: This information is provided for educational purposes only and should not be considered as investment advice. Please consult with a qualified financial advisor before making any investment decisions.

Sources:

• Invesco CurrencyShares® Canadian Dollar Trust website: https://us.invesco.com/products/etfs/profile/summary?audienceType=Investor&audienceSegments=All&productId=etf/fxc
• Morningstar: https://www.morningstar.com/etfs/fxc/overview
• Bloomberg: https://www.bloomberg.com/quote/FXC:US