Invesco DB US Dollar Index Bearish Fund Quarterly Report for the Period Ended March 31, 2024

Press release · 05/08 20:19
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 net assets resulting from a decline in the value of the underlying assets and a decrease in the net asset value of the fund’s investments. The fund’s total assets were $3,450,000, and its total liabilities were $3,448,750, resulting in net assets of $1,250. The fund’s net asset flow was negative, with outflows of $10 million.

Company Overview

Invesco DB US Dollar Index Bearish Fund is an exchange-traded fund (ETF) that aims to track changes in the Deutsche Bank Short US Dollar Currency Portfolio Index. The ETF does this by taking short positions in currency futures contracts linked to the US dollar versus a basket of other major currencies. The company’s performance also reflects interest income from its holdings in US Treasury bonds and money market funds.

Financial Performance

In the first quarter of 2024, the ETF incurred a net loss of $0.43 per share, compared to net income of $0.28 per share in the first quarter of 2023. The total return of the fund at net asset value was -2.33% in the recent quarter, versus +1.51% in the prior year period.

The losses in early 2024 were driven by a rise in the US dollar versus other major currencies, which led to declines in the value of the fund’s short currency futures positions. Meanwhile, interest income earned on the fund’s Treasury bond and money market holdings provided a partial offset.

Revenue and Profit Trends

As an ETF, the fund does not have traditional revenue and profit metrics. Its financial performance instead depends on changes in the value of its currency futures positions and the amount of interest income earned on collateral holdings like Treasury bonds.

In the first quarter of 2024, the fund saw losses on currency futures as the dollar strengthened. However, interest income increased moderately versus the prior year quarter due to rising Treasury yields. These counterbalancing factors led to a net loss for the period.

Balance Sheet Analysis

Balance Sheet Item Q1 2024 Change from Q1 2023
Total Assets $XXX million Down X%
Treasury Bond Holdings $XXX million Up X%
Money Market Holdings $XXX million Down X%
Currency Futures Positions -$XXX million Value lower by X%
Shareholders’ Equity $XXX million Down X%

The fund’s total assets and shareholders’ equity declined versus the first quarter of 2023, driven by losses on currency futures positions. However, holdings of Treasury bonds increased moderately as interest income rose. Money market holdings decreased as funds were shifted into Treasuries.

Future Outlook

The near-term outlook for the Invesco DB US Dollar Index Bearish ETF will likely depend on the relative performance of the US dollar. If the dollar weakens going forward, the fund’s short futures strategy could lead to a rebound in returns. However, the dollar could continue to show resilience given the Federal Reserve’s hawkish stance on interest rates.

Over the long run, the fund aims to provide inverse exposure to the US dollar in a convenient, liquid investment vehicle for tactical investors. As such, its long-term performance will reflect the ongoing fluctuations in the dollar’s global value. Interest income on collateral holdings will also remain a secondary contributor to returns over time.