Review of GLD-USD leveraged

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  • #78525
    Richard Thomas
    Participant

    Can you please carry out a review of the components of the GLD-USD leveraged strategy?
    I like this strategy a lot and have used it in most of my self constructed portfolios in QT. The problem I have is the lack of liquidity in some of the currency components. In particular CROC. I am trying to re-balance today and purchase additional shares of CROC, however it is extremely difficult to get filled. Today’s current volume as of 10:30am MST is just over 500!! and the bid ask spreads are naturally dreadful.
    Is there anything you can do to look at alternatives without destroying the performance of this strategy?

    #78530
    Alexander Horn
    Keymaster

    Hi Richard,

    there is a lot of discussion regarding CROC, but also the other two currency ETN in this forum, use the search function. Liquidity is low, many cannot trade them in their retirement accounts, and there are also filing related issues. We therefore introduced the GLD/UUP version, which is simple to trade, but at a lower performance.

    There are simply no better alternatives we could use, all have some kind of issue: https://etfdb.com/etfdb-category/leveraged-currency/

    Using limit orders and giving them some time you should still be able to get decent fills, or alternatively consider doing the corresponding FX transactions with USD:AUD.

    #78531

    You can also trade directly the forex currency pair. The name is something like USDAUD. Make sure you trade 2x the CROC value an you don‘t inverse the trade as sometimes it‘s also a long currency pair AUDUSD

    #78910
    Richard Thomas
    Participant

    I have looked into what you describe as your GLD/UUP version as an alternative to the GLD leveraged. However this strategy only invests in either GLD or GSY (which only appears to have a 30% exposure to the USD) and UUP is not included as an option at all. Can you please explain the reason for this?

    #78917

    You are right, the description is still the old one. We forgot to update it when we updated the strategy. The strategy switches between Gold and US$ „cash“, so GSY is a sort of cash with a 2-3% yield. GSY is composed mainly by US$ denominated treasuries and corporate bonds with less than one year of duration which gives it a very low cash like volatility

    #79570
    Andrix88
    Participant

    So you don’t use UUP?

    #79575
    Alexander Horn
    Keymaster

    UUP is a long USD exposure, so for USD based investors it’s like being in cash, and we prefer GSY as it offers some return, see comment above.

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