Euro ETF

A A A

DEFINITION

An exchange-traded fund that invests in the euro currency, either directly or through the holding of euro-denominated short-term debt instruments. Euro ETFs are often set up as currency trusts or grantor trusts, meaning that stakeholders have a specific claim to a set amount of euros per share.

INVESTOPEDIA EXPLAINS

The euro is one of the most liquid currencies in the world, making ETFs an attractive option for investors who wish to gain from the currency's appreciation without entering the futures or forex markets. Euro ETFs can also be shorted, as a bet that the euro will fall compared to the dollar.

Euro ETFs do not have an underlying index to manage against; instead, they attempt to track as closely as possible the exchange rate between the euro and the U.S. dollar, minus expenses. Some of these funds are not eligible for the long-term capital gains tax rate of 15%, because a raw currency is essentially being held by the ETF shareholder. Most ETFs in this class will pay regular dividends equaling the local (euro-denominated) interest rate that is received on the short-term commercial-paper instruments or government bonds that are held in the fund.


VIDEO

RELATED TERMS
  1. Exchange Rate

    The price of a nation’s currency in terms of another currency. An exchange rate ...
  2. Currency ETF

    Exchange-traded funds (ETFs) invested in a single currency or basket of currencies. ...
  3. Euro Interbank Offer Rate - EURIBOR

    The rates offered to prime banks on euro interbank term deposits. The EURIBOR ...
  4. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically ...
  5. Nominal Effective Exchange Rate ...

    The unadjusted weighted average value of a country's currency relative to all ...
  6. Short Hedge

    An investment strategy that is focused on mitigating a risk that has already ...
  7. Commodity ETF

    Exchange-traded funds that invest in physical commodities such as agricultural ...
  8. Bear Fund

    A mutual fund designed to provide higher returns when the market declines in ...
  9. Cash-And-Carry Trade

    A trading strategy in which an investor buys a long position in a security or ...
  10. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann that is used to ...
Related Articles
  1. Exploring Non-Dollar Currencies For ...
    Options & Futures

    Exploring Non-Dollar Currencies For ...

  2. Getting Started In Forex Options
    Options & Futures

    Getting Started In Forex Options

  3. Get To Know The Major Central Banks
    Forex Education

    Get To Know The Major Central Banks

  4. How are international exchange rates ...
    Forex

    How are international exchange rates ...

  5. An Introduction To Exchange-Traded Funds ...
    Investing

    An Introduction To Exchange-Traded Funds ...

    By Free
  6. Japan ETFs May Radiate To Further Weaken ...
    Mutual Funds & ETFs

    Japan ETFs May Radiate To Further Weaken ...

  7. Is There A Changing Of The ETF Guard?
    Mutual Funds & ETFs

    Is There A Changing Of The ETF Guard?

  8. Has Stock Bias Affected Your ETF Asset ...
    Bonds & Fixed Income

    Has Stock Bias Affected Your ETF Asset ...

  9. How Oil ETFs React To Falling Energy ...
    Chart Advisor

    How Oil ETFs React To Falling Energy ...

  10. Oil Chart Suggests That Now Is The Time ...
    Chart Advisor

    Oil Chart Suggests That Now Is The Time ...

comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center