10-Q: Invesco CurrencyShares Swiss Franc Trust Reports Mixed Q1 2024 Results Amid Currency Volatility

Invesco CurrencyShares Swiss Franc Trust reports a net comprehensive income of $39,206 for Q1 2024, impacted by market volatility and Swiss National Bank's rate cut, contrasting with a net comprehensive loss of $205,377 in Q1 2023.

Summary

• Invesco CurrencyShares Swiss Franc Trust's Q1 2024 net comprehensive income was $39,206, a significant improvement compared to the $205,377 loss in Q1 2023.
• The Trust's assets decreased from $190.37 million on December 31, 2023, to $148.24 million on March 31, 2024, primarily due to a decrease in Swiss Franc deposits.
• The number of outstanding shares decreased from 1,800,000 on December 31, 2023, to 1,500,000 on March 31, 2024, reflecting share redemptions.
• The Trust distributes excess interest earned to shareholders on a monthly basis; a distribution of $0.00416 per share, totaling $6,240, was paid on April 8, 2024.
• The Sponsor's fee, calculated at an annual rate of 0.40% of the Swiss Francs in the Trust, is a primary expense.
• The Trust's investment objective is to reflect the price in USD of the Swiss Franc, plus accrued interest, less expenses.
• The interest rate on the primary deposit account was 0.25% as of March 31, 2024.
• The Trust is exposed to concentration risk due to its assets being solely in Swiss Francs, making it vulnerable to fluctuations in the Swiss Franc's value.

Sentiment

Score: 5

Explanation: The report presents a mixed picture. While the Trust returned to profitability, asset levels decreased, and the Swiss Franc faced headwinds due to interest rate cuts. The outlook is uncertain due to currency volatility and global economic factors.

Positives

• The Trust's net comprehensive income improved significantly, from a loss of $205,377 in Q1 2023 to a profit of $39,206 in Q1 2024.
• The Trust continues to provide a cost-effective way for investors to gain exposure to the Swiss Franc.
• The Trust maintains a transparent structure, backed by physical Swiss Franc deposits.
• The Trust distributes excess interest earned to shareholders on a monthly basis.

Negatives

• The Trust's assets decreased from $190.37 million to $148.24 million, primarily due to a decrease in Swiss Franc deposits.
• The Trust is subject to concentration risk as all its assets are in Swiss Francs, making it vulnerable to currency fluctuations.
• Lower interest rates in Switzerland, influenced by the Swiss National Bank's rate cut, may reduce the appeal of the Swiss Franc and impact the Trust's performance.
• The Sponsor's fee of 0.40% reduces the overall return for investors.

Risks

• Fluctuations in the Swiss Franc/USD exchange rate can significantly impact the value of the Shares.
• Changes in Swiss interest rates, influenced by the Swiss National Bank, can affect the attractiveness of the Swiss Franc.
• Global economic and political events can influence the Swiss Franc's value.
• The Trust's assets are concentrated in a single financial institution (JPMorgan Chase Bank, N.A., London Branch), posing a risk if the Depository becomes insolvent.
• The Trust's performance is subject to market volatility, including factors such as Federal Reserve policies and geopolitical tensions.

Future Outlook

The report contains forward-looking statements regarding future developments and their potential effects, but these are not guarantees of future performance and are subject to various factors, including fluctuations in the price of the Swiss Franc.

Management Comments

• The management of the Sponsor, including Brian Hartigan and Kelli Gallegos, concluded that the Trust's disclosure controls and procedures were effective.
• 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.

Industry Context

The performance of the Invesco CurrencyShares Swiss Franc Trust is closely tied to the movements of the Swiss Franc against the US Dollar, influenced by factors such as central bank policies (SNB and Federal Reserve), global economic conditions, and geopolitical events. The Trust provides a vehicle for investors to gain exposure to these currency movements without directly holding the currency.

Comparison to Industry Standards

• The Invesco CurrencyShares Swiss Franc Trust (FXF) is comparable to other currency ETFs such as the CurrencyShares Euro Trust (FXE) and the Invesco CurrencyShares Japanese Yen Trust (FXY).
• These ETFs aim to track the price of their respective currencies against the US dollar, providing investors with a relatively straightforward way to gain exposure to foreign exchange markets.
• FXF's expense ratio of 0.40% is typical for currency ETFs, and its performance is directly linked to the CHF/USD exchange rate.
• Unlike actively managed currency funds, FXF operates passively, holding Swiss Franc deposits and distributing interest income (if any) to shareholders, less expenses.

Related Party Transactions

• The Trust pays the Sponsor, Invesco Specialized Products, LLC, a fee that accrues daily at an annual nominal rate of 0.40% of the Swiss Francs in the Trust.

Stakeholder Impact

• Shareholders are impacted by fluctuations in the Swiss Franc/USD exchange rate, which directly affects the value of their Shares.
• Shareholders receive monthly distributions of excess interest earned, if any, after deducting the Sponsor's fee and other expenses.
• Authorized Participants are affected by the creation and redemption process of Baskets, which involves the exchange of Swiss Francs for Shares.

Key Dates

Keywords

Swiss Franc, CurrencyShares, Invesco, FXF, ETF, Currency Trust, Exchange Rate, Interest Rates, Financial Report