Best And Worst Performing Currency ETFs Of 2015

The U.S. dollar continued to gain strength against a basket of major currencies for the most part of 2015. This was due to a stable U.S. economy while the other major economies were having a tough time. Meanwhile, geopolitical tensions and divergence in monetary policies between the U.S. and other major players helped the U.S. dollar to surge against the major currencies last year.

Sluggish global growth environment forced the central banks of some developed economies including China, Euro-zone and Japan to implement economic stimulus measures such as quantitative easing program and rate cuts. On the other hand, a favorable economic environment, indicated by steady GDP growth and strong labor market data, allowed the Fed to raise the key interest rate for the first time in nearly a decade.

The favorable economic scenario in the U.S., which was also indicated by the Fed in their last policy meeting, in contrast to slowdown in other major economies including China encouraged investors to invest in the U.S. boosting the demand of the dollar.PowerShares DB US Dollar Bullish ETF (UUP - ETF report) that tracks the performance of the U.S. dollar against a basket of currencies jumped nearly 5.6% in 2015.  
 
Best Currency ETFs of 2015
 
WisdomTree Bloomberg US Dollar Bullish ETF (USDU - ETF report)   
 
Healthy gains in the U.S. dollar throughout 2015 helped USDU to provide the best return in 2015 among the currency ETFs. This product offers exposure to the U.S. dollar against a basket of 10 developed and emerging market currencies by tracking the Bloomberg Dollar Total Return Index (read: 5 Outperforming Active ETFs of 2015).
 
In terms of holdings, the ETF allocates nearly 31.6% in euro while 30.1% collectively in the Japanese yen and Canadian dollar. The fund has so far managed an asset base of $236.2 million and sees an average daily volume of around 142,000 shares. It charges 50 bps in total fees and expenses. The fund has added 6.7% in 2015.
 
Market Vectors Indian Rupee/USD ETN (INR - ETF report)
 
According to International Monetary Fund (IMF), India remained one of the few bright spots in the global economy in 2015. Reportedly, the economy expanded at a 7.4% pace in the July-September quarter, surpassing China’s growth rate and emerged as the world’s fastest growing major economy. Increase in activities in sectors such as manufacturing, mining and services sectors were the main drivers behind this growth.
 
Moreover, economic policies including rate cuts by the Reserve Bank of India (RBI) along with several measures taken by the Indian government had a positive impact on the economy in 2015. These factors led the Indian rupee to be one of the leading major currencies worldwide against the dollar during 2015 (read: Best and Worst Performing Currency ETFs of 2014).