Media Release: Cash regains its crown as ETF Securities enhances a late-cycle investment option
Apr 08, 2019
Cash regains its crown as ETF Securities enhances a late-cycle investment option
• Investors now focussing on U.S. cash as the equity cycle moves into its late stages
• U.S. yields outstripping Australian rates as cash delivers the twin benefits of liquidity and downside protection
• ETF Securities rebrands enhanced U.S. dollar cash exchanged traded fund (ASX code: ZUSD) to maximise returns in an uncertain market
SYDNEY, April 8 – ETF Securities has strategically repositioned its key U.S. dollar cash ETF with product enhancements to ensure investors gain the greatest advantage from short-end yields.
ETFS Enhanced USD Cash ETF (ASX codes: ZUSD, and formerly known as the ETFS Physical US Dollar ETF) trades on the Australian Securities Exchange and allows local investors to access the strength of the dominant US dollar, as well as the returns prevailing in US money markets.
“With investors increasingly concerned about the end of the equity bull cycle they are naturally looking carefully at defensive assets such as cash,” said Kris Walesby, Head of ETF Securities Australia, the country’s only independent and locally-owned ETF provider.
“Cash holds an important place in portfolios not only for liquidity but also downside protection,” Mr Walesby said. “As we enter the end stages of this investment cycle, it’s fair to say cash is king.”
However, when many Australian investors think about cash investments, they tend to ignore the benefits of looking beyond local shores. “While understandable, cash balances should be diversified in the same way as equities and fixed income. This gives the benefit of both diversification and, often, better yields.”
The repositioned U.S. dollar cash fund ranks as the lowest cost U.S. dollar cash ETF in the Australian market with a management fee 0.3%.
“While ZUSD previously held all cash in overnight accounts, it will now invest its assets in U.S. dollar bank deposits with maturities ranging from overnight to three months. This will enable the fund to provide even greater diversification,” Mr Walesby said.
To better reflect the changed nature of this product, ETF Securities has also upgraded the distribution frequency from annually to quarterly beginning 30 June 2019.
ZUSD is not currency hedged, with investors benefitting from rising U.S. dollar interest rates and an appreciation of the U.S. dollar against the Australian dollar.