Will Invesco DB US Dollar Index Bullish ETF (UUP) Rally Higher in 2021?

The Invesco DB US Dollar Index Bullish ETF (UUP) has delivered about 4% in returns to investors since the start of the year, but recent struggles could limit its upward potential.

UUP Has Underperformed in Recent Weeks

The Invesco DB US Dollar Index Bullish ETF (UUP) is a fund managed by Invesco and currently has more than $500 million in assets under management. Thus making it the largest ETF in the Currency ETF sector.

UUP is designed to align with the performance of the Deutsche Bank Long USD Currency Portfolio Index – Excess Return before fees and expenses. The Deutsche Bank Long USD Currency Portfolio Index – Excess Return is a rules-based index that is comprised of only long U.S. Dollar Index futures contracts traded on the ICE futures platform. The annual operating expenses of the ETF is 0.76%, making it one of the most expensive funds in the space. The ETF has a 12-month trailing dividend yield of 0%.

Will UUP Rally Higher?

UUP is a smart beta exchange-traded fund and has been around since 2007. Since the start of the year, UUP has gone up by 4.08% since the start of the year and is currently trading at $25.23 per share at the moment.

Despite its excellent performance since the start of the year, UUP has been underperforming in recent weeks. Over the past month, UUP has only added 0.20% to its value and is trading in the red zone at the time of writing this report.

With its recent performance, UUP could struggle to record more gains over the coming weeks as the holiday period approaches. UUP has been trading between $24 and $25 since the start of the year and could find it tough to breach the $26 level over the coming weeks. The UUP ETF has a beta of -0.11, and its standard deviation currently stands at 6.62%. Hence, making it a medium-risk choice in the smart beta ETF space.