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Australian dollars

db X-trackers lists Aussie dollar cash ETF in London

db X-trackers, Deutsche Asset & Wealth Management’s exchange-traded funds platform, is providing European investors with liquid, easily traded access to Australian money market rates via a new London listing.

The Australian overnight money market rate currently yields three per cent on an annualised basis, placing it as an outlier in comparison with money market rates in other developed markets – the equivalent Sterling Overnight Index Average is currently 0.43 per cent, while the equivalent US Federal funds rate is 0.09 per cent.

The db x-trackers II Australian Dollar Cash Ucits ETF may therefore appeal to investors searching for yield in the current low-rate environment. As the fund is denominated in Australian dollars, but trades in GBP, it may also appeal to investors looking to diversify their currency exposure, or who want to take a view on the movement of the Australian dollar. 

Manooj Mistry, head of exchange-traded products, EMEA, at Deutsche Bank, says: “The Australian dollar has been characterized as a commodity currency, with a track record in recent years of persistently strengthening against other major G10 currencies. Investors can use our Australian dollar cash ETF to easily take exposure to the currency, or simply as an alternative to the currently extremely low interest rates associated with European and UK money markets.”

The ETF tracks the performance of an index which reflects a daily rolled deposit earning Australia’s official cash rate (OCR). It currently has AUD30m in assets under management, and is being cross-listed from Asia, where it trades on the Hong Kong and Singapore stock exchanges.

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