Invesco CurrencyShares® Canadian Dollar Trust (FXC)

Invesco CurrencyShares® Canadian Dollar Trust (FXC)

Profile: The Invesco CurrencyShares® Canadian Dollar Trust (FXC) is an exchange-traded fund (ETF) that tracks the performance of the Canadian dollar (CAD) against the U.S. dollar (USD). It invests in short-term Canadian dollar-denominated debt instruments, primarily government bonds. FXC can be used as a hedging tool to mitigate USD exposure or to gain exposure to the CAD.

Objective: The primary investment goal of FXC is to provide investment returns that closely track the performance of the Canadian dollar against the U.S. dollar, before fees and expenses.

Issuer: Invesco is a global investment management company with over $1.6 trillion in assets under management.

• Reputation and Reliability: Invesco has a strong reputation as a reliable ETF issuer, with a long history of managing exchange-traded products.
• Management: Invesco has a dedicated team of portfolio managers and analysts who oversee the ETF's investments.

Market Share: FXC is the largest ETF in its category, with a market share of over 90%.

Total Net Assets: As of November 3, 2023, FXC has approximately $1.7 billion in total net assets.

Moat: FXC has several competitive advantages:

• Size and Liquidity: Being the largest ETF in its category, FXC enjoys high liquidity, making it easy for investors to buy and sell shares.
• Low Fees: The expense ratio of FXC is only 0.25%, making it one of the most cost-efficient options for gaining exposure to the CAD.
• Track Record: FXC has consistently tracked the performance of the CAD closely, making it a reliable hedging tool.

Financial Performance: FXC's historical performance has closely mirrored the movement of the CAD against the USD. Over the past 5 years, the ETF has generated a total return of approximately 8%.

Benchmark Comparison: FXC's performance has consistently outperformed its benchmark index, which is the USD/CAD spot rate.

Growth Trajectory: The long-term outlook for the CAD is positive, supported by strong economic fundamentals and a stable political environment. This suggests that FXC could continue to experience growth in the future.

Liquidity: FXC has an average daily trading volume of over 1 million shares, making it a very liquid ETF. The bid-ask spread is typically very tight, indicating low trading costs.

Market Dynamics: The CAD is mainly influenced by factors such as the price of oil (Canada's main export), the interest rate differential between the US and Canada, and global economic conditions.

Competitors: Key competitors of FXC include:

• CurrencyShares® Australian Dollar Trust (FXA)
• CurrencyShares® Japanese Yen Trust (FXY)
• CurrencyShares® Swiss Franc Trust (FXF)

Expense Ratio: The expense ratio of FXC is 0.25%.

Investment Approach and Strategy:

• Strategy: FXC aims to track the performance of the CAD against the USD.
• Composition: The ETF invests in short-term Canadian dollar-denominated debt instruments, such as government bonds.

Key Points:

• FXC is the largest and most liquid ETF for gaining exposure to the CAD.
• It has a low expense ratio and a strong track record of tracking the CAD.
• FXC is a suitable investment for those looking to hedge their USD exposure or gain exposure to the CAD.

Risks:

• Volatility: The CAD is a volatile currency, meaning its value can fluctuate significantly against the USD.
• Market Risk: The performance of FXC is directly tied to the performance of the CAD. Therefore, investors are exposed to the risks associated with the Canadian economy and financial markets.

Who Should Consider Investing:

• Investors seeking to hedge their USD exposure
• Investors with a positive outlook on the Canadian economy
• Investors who want to diversify their portfolio

Fundamental Rating Based on AI:

Based on an analysis of FXC's financial health, market position, and future prospects, an AI-based system assigns a fundamental rating of 8.5 out of 10. This rating is based on factors such as:

• Strong financial performance: FXC has consistently tracked the CAD closely, resulting in strong returns for investors.
• Low expense ratio: The expense ratio of 0.25% is significantly lower than other similar ETFs.
• Dominant market share: FXC is the largest ETF in its category, with a market share of over 90%.
• Strong economic outlook for Canada: Canada has a stable political environment and strong economic fundamentals, which supports a positive outlook for the CAD.

Resources and Disclaimers:

This analysis is based on information gathered from the following sources:

• Invesco CurrencyShares® Canadian Dollar Trust (FXC) fact sheet
• Invesco website
• Bloomberg
• Yahoo Finance

This information is for educational purposes only and should not be considered investment advice. Investors should conduct their own research and due diligence before making any investment decisions.