10-Q: Invesco Japanese Yen Trust Reports Q3 2025 Loss

Invesco CurrencyShares Japanese Yen Trust reported a net comprehensive loss of $630,003 for Q3 2025, driven by sponsor fees and market volatility.

Summary

• Net comprehensive loss for the three months ended September 30, 2025, was $(630,003), an increase from $(386,753) for the same period in 2024.
• Net comprehensive loss for the nine months ended September 30, 2025, was $(1,904,045), compared to $(1,200,439) for the same period in 2024.
• Total Assets as of September 30, 2025, increased to $545,494,925 from $393,691,700 at December 31, 2024.
• Redeemable Capital Shares outstanding as of September 30, 2025, were 8,750,000, up from 6,650,000 at December 31, 2024.
• Basic and Diluted Earnings (Loss) per Share for Q3 2025 was $(0.06), consistent with Q3 2024.
• Basic and Diluted Earnings (Loss) per Share for the nine months ended September 30, 2025, was $(0.19), an improvement from $(0.21) for the same period in 2024.
• The interest rate on the Trust's primary Japanese Yen deposit account was 0.00% as of September 30, 2025.
• The Japanese Yen (JPY/USD) fell in the third quarter of 2025, partially unwinding gains from the first half of the year, influenced by steady Japanese policy rates and delayed Bank of Japan rate hike expectations.
• The Trust is a passive investment vehicle designed to reflect the price of the Japanese Yen in U.S. Dollars, less expenses.

Sentiment

Score: 4

Explanation: The Trust is performing as expected for a passive vehicle with 0% interest income, consistently incurring losses due to sponsor fees. The JPY's performance is market-driven, and Q3 2025 saw a decline, which is negative for the Trust's objective. However, the increase in assets and shares outstanding suggests continued investor interest despite the losses.

Positives

• Total assets increased significantly to $545,494,925 as of September 30, 2025, from $393,691,700 at December 31, 2024, indicating growth in the Trust's holdings.
• The number of outstanding redeemable capital shares grew to 8,750,000 from 6,650,000 over the same period, suggesting increased investor participation.
• Basic and diluted loss per share for the nine months ended September 30, 2025, improved slightly to $(0.19) compared to $(0.21) in the prior year period.

Negatives

• Net comprehensive loss increased for both the three-month period (to $(630,003) from $(386,753)) and the nine-month period (to $(1,904,045) from $(1,200,439)) ended September 30, 2025.
• The Trust continues to incur net comprehensive losses due to the Sponsor's fee and interest expense on currency deposits, with no offsetting interest income from its Japanese Yen deposits (0.00% interest rate).
• The Japanese Yen (JPY/USD) experienced a decline in Q3 2025, which negatively impacts the Trust's investment objective of reflecting the Yen's price.

Risks

• All assets are Japanese Yen, creating a concentration risk highly susceptible to fluctuations in the JPY/USD exchange rate.
• A decline in the Japanese Yen to USD exchange rate will adversely affect the value of the Shares, influenced by factors such as national debt, trade deficits, inflation, interest rates, and global political/economic events.
• Substantial sales of Japanese Yen by official sectors (central banks, governmental agencies) could negatively impact an investment in the Shares.
• All Japanese Yen are held by a single Depository (JPMorgan Chase Bank, N.A., London Branch), increasing the risk of loss if the Depository becomes insolvent.
• The Depository may change the interest rate on deposits, including reducing it to zero or below zero, which could increase expenses.
• Changes to United States tariff and trade policies have increased and may continue to increase the volatility of foreign exchange rates, materially and adversely affecting the performance of the Shares.

Future Outlook

Forward-looking statements indicate that actual results may differ materially from expectations due to fluctuations in the price of the Japanese Yen. The Sponsor does not intend to revise or update these forward-looking statements. The Trust operates as a passive investment vehicle and does not engage in activities to profit from or mitigate losses caused by changes in the Japanese Yen's price.

Management Comments

• Forward-looking statements are based upon our current expectations and beliefs concerning future developments and their potential effects on us, but are not guarantees of future performance.
• Neither Invesco Specialized Products, LLC (the Sponsor) nor any other person assumes responsibility for the accuracy or completeness of forward-looking statements contained in this report.
• The forward-looking statements are made as of the date of this report, and will not be revised or updated to reflect actual results or changes in the Sponsors expectations or predictions.
• The Trust is a passive investment vehicle and does not have any officers, directors or employees, nor does it engage in any activities designed to obtain profit from, or ameliorate losses caused by, changes in the price of the Japanese Yen.
• The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trusts liquidity and capital resources needs.
• Brian Hartigan, Principal Executive Officer, and Kelli Gallegos, Principal Financial and Accounting Officer, concluded that the Trust's disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported timely.

Industry Context

The Trust's performance is directly influenced by global macroeconomic factors, including U.S. economic uncertainty, Federal Reserve monetary policy (easing expectations), global tariff gyrations, and geopolitical concerns. The Japanese Yen's movements are particularly sensitive to the interest rate differentials between Japan and the U.S., with the Bank of Japan's (BoJ) steady policy rates and delayed rate hike expectations in Q3 2025 contrasting with the Fed's dovish tilt. In Q3 2024, a surprise Japanese rate hike and the Fed's first rate cut significantly boosted the Yen, highlighting the impact of central bank actions on currency carry trades and overall market sentiment.

Comparison to Industry Standards

• The Trust's investment objective is to reflect the price of the Japanese Yen in U.S. Dollars, less expenses, making its performance directly comparable to the JPY/USD exchange rate.
• As a passive investment vehicle, its operational losses are primarily due to the Sponsor's fee (0.40% annual nominal rate) and the 0.00% interest rate on its Japanese Yen deposits, which is a key differentiator compared to other currency-holding instruments that might earn interest.
• The Trust does not hold or use derivative products, distinguishing it from more complex currency investment strategies or funds that might employ hedging or speculative positions.

Corporate Governance

Related Party Transactions

• The Trust pays Invesco Specialized Products, LLC (the Sponsor), a related party, a Sponsor's fee. This fee accrues daily at an annual nominal rate of 0.40% of the Japanese Yen in the Trust and is paid monthly.

Stakeholder Impact

• Shareholders are directly impacted by the fluctuations in the JPY/USD exchange rate and bear the costs of the Trust's operations, including the Sponsor's fee, which results in consistent net comprehensive losses.
• The Sponsor, Invesco Specialized Products, LLC, benefits from a consistent revenue stream through the annual 0.40% fee on the Trust's assets.
• The Depository, JPMorgan Chase Bank, N.A., London Branch, holds the Trust's assets and provides deposit services, but currently pays 0.00% interest on the primary deposit account.
• Authorized Participants facilitate liquidity by creating and redeeming Baskets of Shares in exchange for Japanese Yen.

Next Steps

• The Trust will continue to operate as a passive investment vehicle, reflecting the price of the Japanese Yen in U.S. Dollars.
• The Trustee will continue to calculate and the Sponsor will publish the Trust's Net Asset Value (NAV) each business day.
• The Trust will continue to issue and redeem Baskets of Shares with Authorized Participants.

Key Dates

Recommendation

The Invesco CurrencyShares Japanese Yen Trust is a passive vehicle designed to track the Japanese Yen's price. Its consistent net comprehensive losses are an expected outcome given the 0.00% interest rate on its deposits and the fixed sponsor fee. The investment decision for FXY is primarily a directional bet on the Japanese Yen against the USD, rather than an assessment of the Trust's internal financial performance. For investors seeking direct exposure to the Japanese Yen, FXY serves its purpose, but its operational losses mean it will always slightly underperform the direct currency movement. Therefore, a 'Hold' recommendation is appropriate for existing investors who maintain their JPY exposure thesis, while new investors should consider their currency outlook.

Keywords

Japanese Yen, FXY, Invesco, CurrencyShares, ETF, Grantor Trust, Foreign Exchange, JPY/USD, SEC Filing, Quarterly Report, Market Risk, Currency Investment