ETF Securities creates exchange-traded currency platform

ETF Securities (ETFS) has created an exchange-traded currency platform, with 18 currency ETCs due to commence trading next week.

The initial range will be listed on the London Stock Exchange, and tracks Morgan Stanley Foreign Exchange indices designed to replicate a fully collateralised long or short investment in one of the G10 currencies against the US dollar.

The G10 currencies include the Australian dollar, Canadian dollar, Swiss franc, euro, British pound, Norwegian Krone, Japanese Yen, Swedish Krona and New Zealand dollar.

The products also offer exposure to local interest rates, as well as the FX movements between the respective currency and US dollar. The ETCs are fully collateralised, to mitigate counterparty risk.

ETFS says returns from most major currencies versus the US dollar have outperformed equities, bonds and real estate, with lower volatility. For example, the provider says the MSFX Long Aud index outperformed UK equities by 13.4, 55.4 and 37.2 percentage points over one, three and five years respectively.

ETFS chief operating officer Nik Bienkowski says: "Currencies are the most liquid class available while currency ETCs also provide access to local interest rates, which have averaged around 5% per annum over the past five years in the case of the Australian dollar."

The provider claims the currency platform is Europe's first such platform and represents the largest in the world.