Invesco DB US Dollar Index Bearish Fund Quarterly Report for the Period Ended March 31, 2024
Invesco DB US Dollar Index Bearish Fund Quarterly Report for the Period Ended March 31, 2024
In the first quarter of 2024, Invesco DB US Dollar Index Bearish Fund reported a net asset value of $34.50 per share, a decrease of 1.2% from the previous quarter. The fund experienced a decrease in average assets under management, which was primarily due to outflows from investors. The fund’s net expense ratio increased slightly due to higher administrative expenses. The fund’s investment objective is to provide a return that is inversely related to the performance of the US Dollar Index.
Company Overview
The Invesco DB US Dollar Index Bearish Fund is an exchange-traded fund that aims to track the Deutsche Bank Short USD Currency Portfolio Index. The Fund takes short positions in currency futures contracts linked to the US dollar in order to profit from a weakening dollar relative to other major currencies.
Fund Performance
In the first quarter of 2024, the Fund’s share price fell 2.39% on a market value basis. This reflected a strengthening of the US dollar over the period, which led to losses for the Fund’s short dollar positioning.
In the first quarter of 2023, the Fund’s share price rose 1.51% on a market value basis. This reflected broad US dollar weakness over the period.
Revenue and Profit Analysis
The Fund aims to generate returns from two main sources:
- Short currency futures positions that track the Deutsche Bank Index
- Interest income from the Fund’s holdings of US Treasuries and money market funds
In Q1 2024, the Fund had a net loss of $0.43 per share. This was driven by a net loss of $0.64 per share from the currency futures positions, offset slightly by $0.21 per share of net investment income from interest and dividends.
Strengths and Weaknesses
Fund provides a simple way for investors to profit from a falling US dollar
Managing Owner has expertise in currency futures trading
Interest income helps cushion losses from futures positions
Performance highly dependent on dollar exchange rate movements
Futures trading involves leverage and can lead to large losses
Fund may underperform dollar index in periods of dollar strength
Future Outlook
The near-term outlook for the US dollar is uncertain, with both upside and downside risks. Key factors that could impact performance include:
- Pace of Fed interest rate hikes
- Global economic growth and risk appetite
- Geopolitics, including Russia-Ukraine conflict
The Fund presents an opportunity for investors who believe the US dollar will weaken from current levels over the medium-term. However, the dollar could continue to exhibit strength in the near-term depending on how the economic and policy backdrop evolves.