Courtesy of Dennis Hudacheck, Index Universe
WisdomTree’s new long-dollar currency ETF is truly one for the ages, literally. I’ve long felt that we’ve needed an alternative to the decades-old US Dollar Index, which was created back in 1973.
So how does the WisdomTree Bloomberg US Dollar Bullish Fund (USDU) differ from its lone competitor, the $682 million PowerShares BD US Dollar Bullish Fund (UUP | B-39), which also happens to be the largest currency ETF?
For starters, there are major differences in the composition of the two funds. There are also differences in the structure of the ETFs.
More on that later, but first let’s start with the currency basket.
WisdomTree’s USDU closely follows the newly created Bloomberg Dollar Spot Index (BBDXY), which includes a trade- and liquidity-selected and -weighted basket of currencies that is rebalanced annually in December.
USDU currently shorts a basket of 10 currencies from major U.S. trading partners from developed as well as emerging markets, including the Brazilian real, Mexican peso, South Korean won and Chinese renminbi.