Good ETFs with a Strong Dollar | Summary and Q&A

TL;DR

Explore four ETFs that are well-positioned to perform in a strong dollar environment.

Key Insights

• ⛹️ The Invesco US Dollar ETF (UUP) tracks the dollar against a basket of six major currencies and has shown a 20% increase year-to-date.
• 🫵 The WisdomTree US Dollar ETF (USDU) includes an expanded basket of currencies, offering a comprehensive view of the US dollar's performance.
• 👀 The Vanguard S&P 500 ETF (VUSA), traded in London, can act as a currency hedge for European investors looking for exposure to large US companies.
• 💪 The Vanguard High Dividend ETF (VYM) offers diversification and possible defensive benefits during economic downturns, while historically outperforming in a strong dollar market.
• 🚫 Signing up for the website's beta version offers the advantage of locking in a price and accessing various valuation methods for researching and evaluating companies.
• 🤱 ETF fees vary, with the Invesco and WisdomTree ETFs charging higher fees due to their specialized focus.

Transcript

hi I'm Jimmy in this video we're looking for ETFs that could do well with a strong dollar now many people may know that recently as the economy struggled as the Federal Reserve has increased interest rates the dollar has gotten has gotten fairly strong relative to other currencies around the world well some ETFs are better positioned to do well in ... Read More

Questions & Answers

Q: What is an ETF, and how does it differ from traditional investment funds?

An ETF, or exchange-traded fund, is a fund comprising a diversified portfolio of assets that can be bought and sold on stock exchanges throughout the day, similar to shares of a company. Unlike traditional mutual funds, which are priced once daily, ETFs offer intraday liquidity.

Q: Which ETFs track the performance of the US dollar against a basket of currencies?

The Invesco US Dollar ETF (UUP) and WisdomTree US Dollar ETF (USDU) are designed to replicate the performance of the US dollar compared to a selection of global currencies, providing investors with exposure to currency movements.

Q: What are the advantages of trading the Vanguard S&P 500 ETF (VUSA) in London rather than in the US?

By trading VUSA on the London Stock Exchange, investors in Europe or the UK can benefit from potential currency hedging advantages. If the US dollar strengthens against their local currencies, it can offset potential losses in the S&P 500 and provide additional returns.

Q: How does the Vanguard High Dividend ETF (VYM) perform in a strong dollar market?

Although not a pure play on the strong dollar, VYM historically outperforms in such environments. Dividend-paying stocks, which comprise VYM, tend to be less volatile and more defensive during market downturns or economic weakness, making it a potential defensive hedge.

Summary & Key Takeaways

• ETFs are automated investment portfolios that can be bought and traded like stocks.

• Invesco US Dollar ETF (UUP) and WisdomTree US Dollar ETF (USDU) track the US dollar against a basket of currencies and have shown positive returns in a strong dollar market.

• Vanguard S&P 500 ETF (VUSA) provides exposure to large US companies but is traded in London, offering potential currency hedging benefits.

• Vanguard High Dividend ETF (VYM) historically outperforms in a strong dollar market and offers diversification through dividend-paying stocks.