10-Q: Invesco CurrencyShares Canadian Dollar Trust Reports Q2 2024 Results

Invesco CurrencyShares Canadian Dollar Trust reports its financial results for the quarter ended June 30, 2024, noting impacts from market volatility and currency fluctuations.

Summary

• Invesco CurrencyShares Canadian Dollar Trust was formed on June 8, 2006.
• The Trust's investment objective is to reflect the price in USD of Canadian Dollars, plus accrued interest, less expenses.
• As of June 30, 2024, the Trust had 800,000 redeemable capital shares outstanding.
• Canadian Dollar deposits, interest bearing were $57,138,963 as of June 30, 2024, compared to $77,824,405 as of December 31, 2023.
• Net comprehensive income for the three months ended June 30, 2024, was $343,089, compared to $480,579 for the same period in 2023.
• Net comprehensive income for the six months ended June 30, 2024, was $735,989, compared to $938,715 for the same period in 2023.
• The interest rate in effect as of June 30, 2024, was an annual nominal rate of 2.51%.
• The Trust distributes excess interest earned to shareholders on a monthly basis.
• The Sponsor's fee accrues daily at an annual nominal rate of 0.40% of the Canadian Dollars in the Trust.
• The Canadian Dollar (CAD/USD) continued lower in the second quarter of 2024.
• The Feds higher-for-longer rhetoric and stickier-than-expected US inflation pushed out expectations for rate cuts.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While net comprehensive income decreased, the Trust continues to operate as intended, providing exposure to the Canadian Dollar. The report highlights both positive and negative factors influencing performance.

Positives

• The Trust continues to provide a cost-effective way for investors to gain exposure to the Canadian Dollar.
• The Trust maintains a primary deposit account that earns interest.
• The Trust distributes excess interest to shareholders on a monthly basis.

Negatives

• Net comprehensive income decreased for both the three and six months ended June 30, 2024, compared to the same periods in 2023.
• The value of the Shares is subject to fluctuations in the Canadian Dollar/USD exchange rate.
• The Canadian Dollar (CAD/USD) continued lower in the second quarter of 2024 due to gains in the US dollar and weakness in oil prices.

Risks

• Fluctuations in the Canadian Dollar/USD exchange rate can adversely affect the value of the Shares.
• Concentration of assets in Canadian Dollars creates a concentration risk.
• All Canadian Dollars are held by a single depository, creating risk if the depository becomes insolvent.
• Market volatility and geopolitical concerns can impact the Trust's net comprehensive income.
• The Feds higher-for-longer rhetoric and stickier-than-expected US inflation pushed out expectations for rate cuts.

Future Outlook

The report contains forward-looking statements regarding future developments and their potential effects, which are subject to various factors that may cause actual results to differ materially.

Management Comments

• Brian Hartigan, Principal Executive Officer, and Kelli Gallegos, Principal Financial and Accounting Officer, Investment Pools, concluded that the Trust's disclosure controls and procedures were effective.

Industry Context

This report provides insight into the performance of a currency trust, which is influenced by macroeconomic factors such as interest rates, inflation, and geopolitical events, as well as the performance of the Canadian dollar relative to the U.S. dollar.

Comparison to Industry Standards

• Comparable currency trusts include those tracking other currencies such as the Euro (FXE), British Pound (FXB), and Japanese Yen (FXY).
• The performance of FXC can be compared to these other currency trusts to assess its relative performance.
• The expense ratio of 0.40% is a key factor to compare with similar currency ETFs and trusts.
• The interest rate earned on the Canadian Dollar deposits is also a factor to compare with prevailing interest rates in the Canadian market.

Related Party Transactions

• The Trust pays the Sponsor, Invesco Specialized Products, LLC, a Sponsors fee, which accrues daily at an annual nominal rate of 0.40% of the Canadian Dollars in the Trust and is paid monthly.

Stakeholder Impact

• Shareholders are impacted by fluctuations in the Canadian Dollar/USD exchange rate and the Trust's ability to generate income.
• Authorized Participants are affected by the creation and redemption process for Baskets.
• The Sponsor receives a fee for its services, impacting its financial performance.

Key Dates

Keywords

Canadian Dollar, CurrencyShares, Invesco, FXC, Trust, ETF, Exchange Rate, Financial Results