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Any folks know how to buy UK pound (any etf or symbols for UK pound on Nasdaq or us stock market?) Not interested in open another acct in forex, has 6 accts already so hard to manage
Have you considered holding pounds sterling in a US bank account? TIAA (formerly Everbank) is the best known provider, but I believe Cathay Bank and perhaps others offer this type of account as well.
Of course you would pay to exchange dollars for pounds (and vice versa upon withdrawing), so this might not be good for short term trading. Like any savings account, you're limited to six withdrawals (except in person) in a single month. And the savings account pays no interest, though TIAA's GBP three-month CD pays 0.25%.
In contrast, FXB isn't going to cost anything to buy or sell, aside from market spread of about 6 basis points and tracking error. But it does charge 0.40% annually in ER, and hasn't earned any interest in years. So its pound-denominated value is decreasing by 40 basis points per year. One hopes that with interest rates rising, it starts covering some of that cost with bank interest.
Despite being an ETF, it has similar risk to an ETN. That's because all deposits are held in a JP Morgan Chase account. I figure it's uninsured (thus just a general liability of JPMorgan Chase) because the fund's assets are way above any FDIC limit. Regardless of the reason, the prospectus states that:
Neither the Shares nor the Deposit Accounts and the British Pounds Sterling deposited in them are deposits insured against loss by the FDIC, any other federal agency of the United States or the Financial Services Compensation Scheme of England
The prospectus also states that the interest rate it receives could drop below zero, so in theory the net expense ratio could exceed 0.40%. Though the annual report shows that it has never earned less than 0% interest and has been paid as much as 0.35%/year (mid 2018 through end of 2019).
FXB is an ETF. It holds UK pounds and doesn't seem to be futures-based. ETFs are not insured (whether for stocks, bonds, currency). But it would have liquidation value.
ETNs don't hold anything but are just the IOUs of the sponsor.
Certainly this ETF has underlying assets - JPM bank accounts. In contrast, an iPath ETN has no underlying assets; it is itself an IOU of Barclays.
Think about those ETF assets. They are bank accounts, just general liability IOUs of the bank. Absent insurance (FDIC or other), the account holder (the ETF) doesn't rank any higher in seniority than other creditors.
Should those banks go bust, there will be no more value in the underlying IOUs of JPMorgan Chase (for the ETF) than there will be in the direct IOU of Barclays (for the ETN). In either case, what the ETP holder gets is a pro-rata fraction of the remaining assets of a failed bank.
As the website you referenced (ETFdb) observed: "FXB's deposits are uninsured, leaving investors exposed to the default risk of JPMorgan, the fund's depository bank."
This is different from something like GLD that holds a physical asset, or an ADR that holds a sort-of physical asset (securities in a bank vault). All that FXB holds are uninsured IOUs.
The 30th anniversary for "Black Wednesday" recently occurred. The collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism.
@Observant: you caused a memory flashback for me. At the time of "Black Wednesday" I was teaching French for International Trade and had to explain "le serpent dans le tunnel" monetary system. It was designed by a committee of European technocrats, the purpose of which was to keep the various national currencies within a band of high and low fluctuations in relative value. Of course the Germans were cautious and prudent while the Italians were extravagant in running up debt and thereby devaluing the Lira. Plus ça change....
Comments
https://etfdb.com/etfdb-category/currency/
Of course you would pay to exchange dollars for pounds (and vice versa upon withdrawing), so this might not be good for short term trading. Like any savings account, you're limited to six withdrawals (except in person) in a single month. And the savings account pays no interest, though TIAA's GBP three-month CD pays 0.25%.
In contrast, FXB isn't going to cost anything to buy or sell, aside from market spread of about 6 basis points and tracking error. But it does charge 0.40% annually in ER, and hasn't earned any interest in years. So its pound-denominated value is decreasing by 40 basis points per year. One hopes that with interest rates rising, it starts covering some of that cost with bank interest.
Despite being an ETF, it has similar risk to an ETN. That's because all deposits are held in a JP Morgan Chase account. I figure it's uninsured (thus just a general liability of JPMorgan Chase) because the fund's assets are way above any FDIC limit. Regardless of the reason, the prospectus states that: The prospectus also states that the interest rate it receives could drop below zero, so in theory the net expense ratio could exceed 0.40%. Though the annual report shows that it has never earned less than 0% interest and has been paid as much as 0.35%/year (mid 2018 through end of 2019).
ETNs don't hold anything but are just the IOUs of the sponsor.
https://connect.rightprospectus.com/Invesco/TADF/46138M109/P
Think about those ETF assets. They are bank accounts, just general liability IOUs of the bank. Absent insurance (FDIC or other), the account holder (the ETF) doesn't rank any higher in seniority than other creditors.
Should those banks go bust, there will be no more value in the underlying IOUs of JPMorgan Chase (for the ETF) than there will be in the direct IOU of Barclays (for the ETN). In either case, what the ETP holder gets is a pro-rata fraction of the remaining assets of a failed bank.
As the website you referenced (ETFdb) observed: "FXB's deposits are uninsured, leaving investors exposed to the default risk of JPMorgan, the fund's depository bank."
This is different from something like GLD that holds a physical asset, or an ADR that holds a sort-of physical asset (securities in a bank vault). All that FXB holds are uninsured IOUs.
The collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism.