Understanding the Invesco CurrencyShares Australian Dollar Trust (FXA)

What this ETF is trying to do

The Invesco CurrencyShares Australian Dollar Trust (ticker: FXA) is an exchange-traded fund (ETF). This specific type of ETF is designed to track the value of the Australian Dollar.

What the numbers show

When looking at an ETF, it is important to understand two different types of returns: price return and total return.

• Price Return: This measures only how much the share price changed.

• Total Return: This includes both the change in share price and any cash distributions (dividends) paid out to investors.

For FXA, the numbers show growth in both areas:

• Year-to-Date (YTD): The price return is approximately 6.79%, while the total return is approximately 7.73%.

• One Year: The price return was approximately 7.81%, and the total return was approximately 9.01%.

• Three Years: The price return was approximately 10.73%, and the total return was approximately 15.21%.

To visualize the price change, we can look at an estimated price from roughly one year ago. The price was approximately $65.47, and the current price is $70.59.

Income and distribution explanation

Some investors look for ETFs that pay out cash, known as distributions. FXA has a distribution yield of approximately 1.08%. This means the cash paid out is about 1.08% of the ETF's price. These distributions usually happen monthly, with 11 payments recorded over the last year. It is important to remember that a distribution yield is not the same as total return.

NAV erosion explanation

"NAV erosion" is a term used to describe when the value of the underlying assets in an ETF decreases significantly over time. StockValueFinder uses an "erosion score" to measure this risk. For FXA, the erosion score is 100, which is labeled as "No price erosion detected." There is no severe erosion-risk flag for this ETF.

Pros

• The ETF has shown positive price returns and total returns over the one-year and three-year periods.

• The erosion-risk measurement is rated as "good."

Cons

• There are no specific top holdings listed in the provided data, meaning the portfolio details are not available here.

Beginner takeaway

When studying FXA, remember that the share price and the total return are different numbers. The price return tells you how the stock price moved, while the total return includes the extra cash paid out through distributions. Always look at both to get a full picture of how an ETF has performed.