Highlighting the PowerShares CurrencyShares Japanese Yen Trust

Jim Woods

This week’s fund, the PowerShares CurrencyShares Japanese Yen Trust (FXY), tracks the changes in value of the Japanese yen, which is the national currency of Japan.

FXY is a favorite among investors for both long-and short-term exposure to the yen. Its strategy is simple – it holds Japanese yen, which is the national currency of Japan, in a deposit account with JPMorgan.

Japan’s central bank, the Bank of Japan (BOJ), currently is using a quantitative easing policy to spur economic growth in the country. At its March meeting, BOJ confirmed its stance on keeping interest rates near 0% by removing a target date for achieving its 2% inflation goal.

Leaving policy unchanged shows BOJ’s willingness to stick with its aggressive easing program, which contrasts with the Fed continuing to hike rates. Lower interest rates spur increased spending in the economy.

The Japanese Yen/USD exchange rate, like foreign exchange rates in general, can be volatile and difficult to predict. Investors should do their share of due diligence before investing in the fund.

The fund, launched in February 2007, has a 30-day average daily trading volume of 222,787 shares. In addition, FXY has a market value of roughly $170.2 million and an expense ratio of 0.40%.

Year to date, FXY has returned 5.92%. FXY recently pulled back from its 52-week high of $91.62 to give investors a potentially attractive entry point at the current time.

For investors who believe in the strength of the Japanese yen, I encourage you to look into the PowerShares CurrencyShares Japanese Yen Trust (FXY).

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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