The British Pound has recovered from recent lows, as evidenced by FXB (CurrencyShares British Pound Sterling Trust, Expense Ratio 0.40%, $316 million in AUM) rallying in the past couple sessions.
We read an article on CNN.com this morning titled “Court Ruling Throws Brexit Process Into Doubt,” specifically that “Britain’s plans to leave the European Union were thrown into confusion Thursday after a court ruled that members of Parliament must be given a say in the process.” FXB has experienced a strong year in terms of fund-flows, in spite of flagging performance tied to the sinking British Pound in 2016, pulling in well over $200 million in new assets via creation activity.
FXB is many times larger than the next biggest fund in the space in terms of asset size, as iPath offers the little followed GBB (iPath GBP/USD Exchange Rate ETN, Expense Ratio 0.40%), which only averages about 2,300 shares traded daily.
Given these headlines, British exposed equity funds also immediately come to mind such as the $1.9 billion EWU (iShares MSCI United Kingdom, Expense Ratio 0.49%), HEWU (iShares Currency Hedged MSCI United Kingdom, Expense Ratio 0.48%, $112 million in AUM), DXPS (WisdomTree United Kingdom Hedged Equity, Expense Ratio 0.48%, $28.9 million in AUM), FKU (First Trust United Kingdom AlphaDEX, Expense Ratio 0.80%, $28.8 million in AUM), EWUS (iShares MSCI United Kingdom Small-Cap, Expense Ratio 0.59%, $23.4 million in AUM), DBUK (Deutsche MSCI United Kingdom Hedged Equity, Expense Ratio 0.45%, $6.1 million in AUM), and QGBR (SPDR MSCI United Kingdom Quality Mix, Expense Ratio 0.30%, $2.3 million in AUM).
Of course, with the British Pound itself taking a “pounding” throughout much of 2016, the Currency Hedged alternatives in this space mentioned here, specifically HEWU and DXPS, have been useful tools to investors whom have been able to maintain their allocations to British equities without having to worry about the significant depreciation in the British Pound. HEWU has pulled in more than $100 million in asset flows year-to-date, so it has certainly caught a radar or two institutionally, while DXPS has seen small outflows (-$6 million out).
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.