The best Yuan ETFs is a choice of only two, the WisdomTree Dreyfus Chinese Yuan (CYB), and the Market Vectors Chinese Renminbi (CNY). The CNY is not a true ETF but an ETN, but at this point that is immaterial. Both play the futures market and not the spot price of the Yuan.
Right now might be the time to make an investment in the Chinese Yuan since it is the most undervalued currency in the world. In the later part of the month of June, the Chinese government finally announces they would let the value of the Yuan fluctuate. This is after increasing pressure from America and other countries to do so.
This would allow the Yuan to strengthen and make foreign-made products in China less expensive. There has been some backlash from within the Chinese government fearing their manufacturing export economy might suffer, but just how much is still uncertain.
The economic experts from Bloomberg are reporting that the Yuan has rose 16% against the Euro in 2010 so far, and against the US dollar it is expected to rise to 6.7% by the end of the year. This would be beneficial to both the ETF and ETN that has exposure to the Yuan.
Since the announcement on June 21, 2010, the value of CYB has slightly dropped from a high at the time of the announcement. The one month return as of July 1, 2010 is only 0.61%. The CNY has also fluctuated down but then went up after the announcement for a 1 month return of 0.76%.
Knowing the difference between these two investments could make the difference in a profit or a loss when ETF investing. The CYB is an actively managed ETF currency fund that reflects the fluctuation of the Chinese Yuan, as compared to the US Dollar. The CNY is an unsecured debt security that attempts to track the performance of the S&P Chinese Renminbi Total Return Index, which is a higher risk investment.
The best Yuan ETFs are relative to your risk level as an investor. Entering now before all the fact is known is the only way to be there if there is a huge profit. But it could also be a free fall, so invest with caution.
For additional resources about ETF on this website, please view How to Get Started in ETF Investing.
We strive to bring you the latest and most accurate data possible from the home sites of the investment institutions we name. Always remember – the bigger the risk, the larger the reward or loss. Invest with caution.
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