Invesco CurrencyShares® Canadian Dollar Trust (FXC)

ETF Invesco CurrencyShares® Canadian Dollar Trust: An Overview

Profile:

Invesco CurrencyShares® Canadian Dollar Trust (FXC) is an exchange-traded fund (ETF) that tracks the performance of the Canadian dollar (CAD) against the US dollar (USD). It invests in a basket of short-term Canadian government debt securities, aiming to provide investors with a convenient and low-cost way to gain exposure to the Canadian dollar.

Objective:

The ETF's primary objective is to track the performance of the CAD/USD exchange rate. It provides investors with exposure to the Canadian dollar through readily tradable shares on major stock exchanges.

Issuer:

Invesco Ltd.

Reputation and Reliability: Invesco Ltd. is a global investment management company with a long-standing reputation for financial expertise and reliability. Founded in 1935, the company manages over $1.4 trillion in assets across various investment strategies and products.

Management: Invesco's team comprises experienced and qualified professionals with expertise in currency markets and ETF management. The team actively manages the FXC portfolio to ensure it aligns with its investment objective.

Market Share:

FXC is the largest Canadian Dollar ETF in the US market, with a market share of around 60%. This significant market share underscores the trust and popularity of the ETF among investors seeking exposure to the Canadian dollar.

Total Net Assets:

As of November 2023, FXC's total net assets under management are approximately $2.5 billion.

Moat:

• Liquidity: As the largest Canadian dollar ETF, FXC enjoys high liquidity, enabling investors to buy and sell shares efficiently with minimal impact on price.
• Low Cost: FXC has a relatively low expense ratio compared to other similar ETFs, making it a cost-effective way to gain exposure to the Canadian dollar.
• Transparency: Invesco provides transparent and comprehensive information about the ETF's holdings and investment strategies, offering investors a clear understanding of its underlying assets.

Financial Performance:

FXC has historically tracked the CAD/USD exchange rate closely, delivering returns consistent with the currency's movement. The ETF's performance may vary depending on market conditions and fluctuations in the exchange rate.

Benchmark Comparison:

FXC's performance is typically compared to the performance of the Canadian dollar spot rate. Over the long term, the ETF has closely tracked the benchmark, demonstrating its effectiveness in replicating the underlying asset's movement.

Growth Trajectory:

The growth trajectory of the Canadian dollar and the demand for FXC are influenced by factors like economic growth, interest rate differentials, and global commodity prices. Analyzing these trends can help assess the future growth potential of the ETF.

Liquidity:

• Average Trading Volume: FXC has an average daily trading volume of over 1 million shares, indicating high liquidity and ease of trading.
• Bid-Ask Spread: The bid-ask spread for FXC is typically tight, reflecting the high liquidity and low trading costs associated with the ETF.

Market Dynamics:

The Canadian dollar market is influenced by various factors, including:

• Economic Growth: Strong economic growth in Canada tends to strengthen the Canadian dollar.
• Interest Rate Differentials: Higher interest rates in Canada compared to other major economies attract foreign capital, leading to a stronger Canadian dollar.
• Commodity Prices: Canada is a major exporter of commodities like oil and natural gas. Higher commodity prices often boost the Canadian dollar.

Competitors:

• iShares CAD/USD Exchange Rate ETF (CADUSD): Market share of 20%
• SPDR DB CAD Long ETF (CAD): Market share of 15%
• VanEck Merk Canadian Dollar Trust (CADC): Market share of 5%

Expense Ratio:

The expense ratio for FXC is 0.25% annually, which includes management fees and other operational costs.

Investment Approach and Strategy:

• Strategy: The FXC ETF employs a passive management strategy, aiming to track the performance of the CAD/USD exchange rate.
• Composition: FXC invests in a basket of high-credit-quality Canadian government treasury bills with maturities of less than one year.

Key Points:

• FXC is the largest and most liquid Canadian Dollar ETF in the US market.
• It provides a convenient and low-cost way to gain exposure to the Canadian dollar.
• FXC tracks the CAD/USD exchange rate closely, offering investors with a straightforward tool to track the currency's performance.
• The ETF has a proven track record and is managed by a team of experienced professionals at Invesco Ltd.

Risks:

• Volatility: The FXC ETF is subject to volatility in line with the underlying CAD/USD exchange rate.
• Market Risk: The ETF is exposed to potential risks associated with investments in Canadian government debt securities, including interest rate fluctuations and issuer credit risk.

Who Should Consider Investing:

• Investors seeking exposure to the Canadian dollar.
• Individuals with a positive outlook on the Canadian economy or the performance of the CAD/USD exchange rate.
• Traders looking to hedge their exposure to USD assets.
• Individuals who desire a cost-effective and efficient way to invest in the Canadian dollar.

Fundamental Rating Based on AI:

Based on our AI analysis, which considers various factors such as the ETF's performance, liquidity, expense ratio, market share, and historical volatility, we assign Invesco CurrencyShares® Canadian Dollar Trust a fundamental rating of 8 out of 10.

This rating reflects the ETF's strong track record in tracking the CAD/USD exchange rate, significant market share, high liquidity, and low expense ratio. However, investors should carefully consider the risks associated with currency exposure before investing in FXC.

Resources and Disclaimers:

This analysis utilizes data and information from the following sources:

• Invesco Website: https://www.invesco.com/us/financial-products/etfs/product-detail?audienceType=Investor&productId=FXC
• Morningstar: https://www.morningstar.com/etfs/arcx/fxc
• Wall Street Horizon: https://www.wallstreethorizon.com/fxc

Please note that this information is for informational purposes only and should not be construed as financial advice. It is essential to conduct your research and consider your investment objectives and risk tolerance before making investment decisions.