This is an actively managed currency strategy ETF that adjusts its currency positions using factors such as interest rate differentials and trends among major currencies. It seeks a currency-based source of return with low correlation to stocks and bonds.

It suits investors who want to add a diversifying return source through a currency strategy with low correlation to stocks and bonds, and who can tolerate currency volatility and the risks of active management.

It is an ETF run with an active (actively managed) approach by Simplify.

The fund runs an active strategy that adjusts long and short currency positions using interest rate differentials and price trends among major currencies. It seeks a currency-based source of return with low correlation to stocks and bonds, and its results depend on its calls on currency direction, leaving it exposed to exchange rate movements.

• Currency strategy based on interest rate differentials and trends
• Seeks low correlation with stocks and bonds

Assets under management (AUM) stand at $208.6M, and the total expense ratio is 0.81% per year.

The main point of comparison is that, unlike currency ETFs with exposure to a single currency, this fund is actively managed and sets positions strategically across multiple currencies.

Currency strategies are driven by interest rate differentials between countries, monetary policy, and the strength or weakness of the dollar. They tend to generate returns when interest rate differentials and trends are clear, and to lag when direction is mixed. Because of their low correlation with stocks and bonds, they are sometimes used as a diversifying return source.

Fund flows into currency strategy products diverge depending on dollar strength, the interest rate environment, and demand for diversification. When interest in diversifying return sources beyond stocks and bonds rises, capital can also move into this group of products. It is also worth noting that performance varies with monetary policy and the interest rate environment.

Its strengths are low correlation and its currency strategy, while currency volatility, manager risk, and the possibility of strategy underperformance are considerations.

For exposure to emerging market currencies, direct alternatives include CEW, and for exposure to dollar strength, products such as UUP are also worth comparing. For exposure to dollar weakness, a product such as UDN can be considered as well. While the three products shown in the table, CEW, UUP, and UDN, simply gain exposure to a specific currency direction, this ETF is differentiated by its active currency strategy that uses interest rate differentials and trends.

Here are the points to review before investing in FOXY. Low correlation and a currency strategy are appealing, but currency volatility, manager risk, and the possibility of strategy underperformance should be checked in advance. It is also advisable to compare it with products that offer simple currency exposure.

Exchange rate movements driven by changes in each country's monetary policy and interest rate environment are the main variable for performance, and losses can occur if the call on currency direction is wrong or if interest rate differentials and trends diverge. Because it is an active currency strategy, performance can vary widely.

It is a suitable candidate for investors who want to add a diversifying return source through a currency strategy with low correlation to stocks and bonds. To gain simple exposure to a specific currency direction, products such as CEW and UUP are options, and for an active currency strategy, it is advisable to compare this product alongside them before choosing.