Invesco CurrencyShares® Japanese Yen Trust (FXY)

Overview of ETF Invesco CurrencyShares® Japanese Yen Trust (FXY)

Profile:

ETF Invesco CurrencyShares® Japanese Yen Trust (FXY) is an exchange-traded fund (ETF) that tracks the price of the Japanese yen (JPY) against the US dollar (USD). It provides investors with a way to gain exposure to the JPY without having to directly trade the currency. FXY is considered a currency ETF, specifically a non-deliverable forward (NDF) contract.

Objective:

The primary investment goal of FXY is to track the performance of the JPY/USD exchange rate. This means that the ETF aims to deliver returns that closely mirror the changes in the value of the JPY relative to the USD.

Issuer:

FXY is issued by Invesco, a global investment management company with over $1.4 trillion in assets under management (as of November 2023). Invesco has a long and established track record in the financial industry, dating back to 1935.

• Reputation and Reliability: Invesco has a strong reputation in the market, being recognized for its expertise in managing a wide range of investment products, including ETFs. The company is known for its commitment to transparency and responsible investing practices.
• Management: The ETF is managed by a team of experienced professionals with expertise in currency markets and portfolio management.

Market Share:

FXY is one of the largest and most liquid currency ETFs available in the US market. As of November 2023, it has a market share of approximately 25% within the Japanese Yen ETF category.

Total Net Assets:

FXY currently has over $4 billion in total net assets.

Moat:

The main competitive advantage of FXY is its size and liquidity. The ETF's large asset base allows it to offer investors tight bid-ask spreads and lower transaction costs compared to smaller competitors. Additionally, Invesco's established reputation and track record provide investors with a sense of security and trust.

Financial Performance:

The historical performance of FXY has been closely correlated with the fluctuations in the JPY/USD exchange rate. It has delivered positive returns in periods when the yen strengthens against the dollar and negative returns when the yen weakens.

Benchmark Comparison:

FXY's performance is typically compared to the JPY/USD spot exchange rate. The ETF has historically tracked the benchmark closely, with minimal tracking error.

Growth Trajectory:

The future growth of FXY will depend on the overall demand for JPY exposure and the overall performance of the Japanese economy. As the world's third-largest economy, Japan continues to hold significant influence in global financial markets.

Liquidity:

• Average Trading Volume: FXY has a high average daily trading volume, exceeding 10 million shares, making it a highly liquid ETF.
• Bid-Ask Spread: The bid-ask spread for FXY is typically tight, ranging between 0.01% and 0.02%, indicating low trading costs.

Market Dynamics:

The JPY/USD exchange rate is influenced by various economic and geopolitical factors. Key factors impacting the market include:

• US and Japanese interest rate policies
• Economic growth in the US and Japan
• Global risk sentiment
• Political and trade relations between the US and Japan

Competitors:

The main competitors of FXY within the Japanese Yen ETF category include:

• WisdomTree Japan Yen Fund (JPY)
• ProShares UltraShort Yen (YCS)

Expense Ratio:

FXY has an expense ratio of 0.40% per year, which covers the fund's management and operational expenses.

Investment Approach and Strategy:

• Strategy: FXY tracks the JPY/USD exchange rate through a swap agreement with major financial institutions. The ETF does not hold any physical assets.
• Composition: The ETF's underlying exposure is solely to the JPY/USD exchange rate.

Key Points:

• FXY is a convenient and liquid way to gain exposure to the JPY.
• The ETF closely tracks the JPY/USD exchange rate.
• FXY has a low expense ratio and is actively managed by a team of professionals.
• Investors should be aware of the risks associated with currency fluctuations and economic factors impacting the JPY.

Risks:

• Volatility: The JPY/USD exchange rate can be volatile, leading to potential fluctuations in the ETF's value.
• Market Risk: Political and economic events can significantly impact the JPY and USD, leading to unexpected losses.
• Counterparty Risk: The ETF relies on swap agreements with financial institutions, which carry counterparty risk.

Who Should Consider Investing:

FXY is suitable for investors seeking:

• Exposure to the JPY/USD exchange rate.
• A convenient and liquid way to diversify their portfolios.
• Managing currency risk in their投资组合.

**Evaluation of ETF Invesco CurrencyShares® Japanese Yen Trust’s fundamentals using an AI-based rating system on a scale of 1 to 10, titled 'Fundamental Rating Based