NEW YORK, Feb 20 (Reuters) - Two funds that track the U.S. dollar began trading on The American Stock Exchange on Tuesday, offering retail investors a way to wager on fluctuations in the value of the U.S. currency.
The PowerShares DB U.S. Dollar Bullish Fund and the U.S. Dollar Bearish Fund, launched by Deutsche Bank AG and PowerShares Capital Management LLC, will trade as a commodity pool under the symbols "UUP" and "UDN."
The currency exchange traded funds, or ETFs, will measure the value of the dollar against the DXY index <.DXY> , a basket of six currencies, and will be linked to three-month U.S. Treasury bills and futures contracts.
"Investors, especially in retail, have been seeking options to build positions in favor or against the dollar," said Kevin Rich, director for commodities structuring at Deutsche Bank in New York. "An ETF is more simplified and transparent for people who want that type of currency exposure."
The two ETFs trade like any other stock, with each share representing $25. Each fund will have an expense ratio of 55 basis points.
Against the euro, the dollar was trading 0.2 percent higher on Tuesday at $1.3134
Average trading volumes that surpass $2 trillion a day and a growing number of online platforms have attracted retail investors to the foreign exchange market, traditionally dominated by institutional investors and hedge funds.
Demand for ETFs boosted total assets in such funds by about 38 percent to $417 billion in 2006, according to data from State Street Global Advisors. As recently as last week, a new Japanese yen exchange fund was launched on the New York Stock Exchange. Amex is the third-largest U.S. stock exchange by volume.
Deutsche Bank's Rich said the bank does not have immediate plans to launch more ETFs tracking other currencies.
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