WisdomTree Dreyfus Chinese Yuan Fund: Tracking The Chinese Currency

Even though some finance experts want the US Treasury Secretary to declare China as a currency manipulator, equity markets across the world has made handsome gains whenever China has announced plans to make its currency, the yuan, more flexible against the dollar. As most of the Chinese manufacturing sector is working on thin margins, its clear that the Chinese government would not allow their currency to go down with the dollar ship. Although economists continue to be skeptical about the goodness of the Chinese currency moves, there is no doubt that China is ready to resume greater flexibility with its yuan.

For investors who want to invest in currency in the emerging Chinese market, a favorite investment vehicle continues to be the WisdomTree Dreyfus Chinese Yuan Fund (CYB). The ETF seeks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese Yuan relative to the U.S. dollar. The fund normally invests in a combination of U.S. money market securities with forward currency contracts and currency swaps that are designed to create a position economically similar to a money market security denominated in Chinese Yuan. The average portfolio maturity is 90 days or less. It does not purchase any money market securities with a remaining maturity of more than 397 calendar days. The fund is non-diversified.

A point to remember is that Chinese laws prevents the funds from directly investing in the renminbi, so they hold currency derivatives known as non deliverable forwards. These are similar to futures contracts, which reflect a market’s expectations. As a result the WisdomTree Dreyfus Chinese Yuan Fund (CYB) might not perfectly track the yuan.


Unlike other major currencies, the Yuan can’t be traded on the Forex market. WisdomTree’s CYB ETF is an actively managed ETF currently holding a compilation of futures contracts and swaps with different maturities that seeks to mirror the money market securities denominated in the Chinese Yuan. The fund has no current yield, so it is strictly an appreciation play versus the U.S. dollar.

CYB Issuer: Wisdom Tree


CYB Performance

52 Week Return: -1.38%
YTD Return: -0.79%
1 Week Return: 0.28%
2 Week Return: 0.48%
4 Week Return: 0.64%
13 Week Return: -0.75%
26 Week Return: -1.26%

CYB Expenses & Fees

* Expense Ratio: 0.45%
* Category: Currency
* Category Range: 0.35% to 0.89%
* Category Average: 0.5%

Another key instrument to bet on China’s currency, the renminbi (also called the yuan) is the Market Vectors Chinese Renminbi/USD ETN (CNY). The ETN is an unsecured debt security issued by Morgan Stanley that is linked to the S&P Chinese Renminbi Total Return Index. The ETN seeks to track the performance of the Chinese Renminbi against the US Dollar by investing in rolling three-month non-deliverable currency forward contracts. The annual expense ratio is 0.55 percent and the ETN doesn’t currently pay a dividend.

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