UUP ETF Review: Is US Dollar Index ETF Worth Buying?

Invesco DB US Dollar Index Bullish Fund tracks the U.S. Dollar Index (DXY) through currency futures, providing a direct way to profit from dollar strength or hedge against a portfolio that is implicitly short the dollar through real asset and commodity positions.

Last updated: 2026-02-02 · Data: Yahoo Finance, fund prospectuses, SEC filings

What Is UUP?

The Invesco DB US Dollar Index Bullish Fund (UUP) tracks the Deutsche Bank Long USD Currency Portfolio Index, providing exposure to the US Dollar Index (DXY) through currency forwards and futures. The fund essentially bets on dollar strength relative to a basket of six major currencies: euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. Managed by Invesco with a 0.75% expense ratio, UUP holds $229.8 million in assets since its 2007 inception.

Unlike equity ETFs that hold stocks, UUP achieves its dollar exposure through derivatives contracts while parking the majority of its assets in short-term government securities for collateral.

Current Snapshot

Why It Matters for Real Asset Investors

UUP serves as a critical hedge within the Energy Macro framework because dollar strength directly impacts real asset valuations and commodity prices. When the dollar strengthens, it typically creates headwinds for commodities priced in dollars (making them more expensive for foreign buyers) and pressures emerging market assets. This makes UUP a valuable portfolio insurance policy during periods when real assets might struggle.

The current macro environment presents a complex picture for dollar bulls. While the Federal Reserve's hawkish stance and US economic resilience support dollar strength, mounting fiscal concerns and potential policy shifts create crosscurrents. UUP becomes particularly relevant during risk-off periods when investors flee to dollar safety, or when US monetary policy diverges from other major central banks.

Dollar strength historically coincides with commodity weakness, making UUP an effective hedge against overexposure to energy and materials positions. However, this relationship can break down during stagflationary periods when both the dollar and real assets rise together due to capital flight from other currencies.

Top Holdings

UUP's structure differs from traditional equity ETFs. The fund's primary holding is the Invesco Short-Term Investment Government & Agency Institutional fund (48.1%), which serves as collateral for the currency derivative positions. The actual dollar exposure comes through:

• USD Index Futures Contracts: Providing direct exposure to DXY movements
• Currency Forward Agreements: Targeting specific currency pairs within the index
• US Treasury Bills: Short-term government securities for collateral management
• Money Market Instruments: Additional cash management tools

The fund doesn't hold individual stocks or bonds in the traditional sense, but rather maintains a portfolio of derivatives backed by high-quality short-term securities.

How It Fits the Portfolio

UUP works best as a 2-5% tactical allocation rather than a core holding, functioning as portfolio insurance during periods of dollar strength or global uncertainty. I watch UUP as a hedge against excessive real asset exposure, particularly when commodity positions become oversized or during periods of potential dollar strengthening.

The ETF pairs well with international real asset exposure or emerging market investments, providing a natural hedge against currency risk. Consider increasing UUP exposure when the Federal Reserve turns hawkish relative to other central banks, or when global growth concerns drive safe-haven demand for dollars.

Regime Signals

UUP typically outperforms during several key macro conditions:

Fed Hawkishness: When the Federal Reserve raises rates faster or higher than other central banks, interest rate differentials support dollar strength. The current environment shows some of these dynamics.

Risk-Off Periods: Global uncertainty drives capital flows into dollar-denominated assets, benefiting UUP while pressuring risk assets including many real assets.

US Growth Leadership: When US economic data outperforms expectations relative to other major economies, dollar strength often follows.

Commodity Bear Markets: Historically, strong dollar periods coincide with weak commodity performance, making UUP valuable when real asset momentum fades.

Conversely, UUP struggles during dollar debasement periods, quantitative easing cycles, or when the Fed turns dovish. The fund also faces headwinds when global growth accelerates and investors move away from safe-haven assets toward riskier, higher-yielding alternatives.

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Frequently Asked Questions

What does UUP track?

UUP tracks the Deutsche Bank Long USD Currency Portfolio Index, which reflects the value of the U.S. dollar against a basket of six major currencies: euro (57.6% weight), Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc. UUP rises when the dollar strengthens and falls when the dollar weakens. It uses currency futures contracts rolled on an optimized schedule to minimize roll costs.

What is the expense ratio of UUP?

UUP charges a 0.75% expense ratio. As a currency futures fund, it also earns interest on its T-bill collateral, which partially or fully offsets the management fee depending on short-term interest rate levels. When T-bill yields exceed the expense ratio, UUP effectively pays you to hold a dollar-bullish position, creating a positive carry in high-rate environments.

Why would Energy Macro investors use UUP?

Most Energy Macro positions — gold, silver, copper, oil, commodities, emerging market equities — are implicitly short the U.S. dollar. When the dollar strengthens, these positions tend to decline. UUP provides a direct hedge against dollar strength that can protect the portfolio during risk-off periods when capital flows into the dollar. It is used tactically rather than as a permanent allocation.

What drives the U.S. dollar?

The dollar is driven by interest rate differentials (higher U.S. rates attract capital), economic growth differentials (stronger U.S. growth attracts investment), and global risk appetite (risk-off environments drive dollar demand as the global reserve currency). Within Energy Macro, the dollar is a critical variable because dollar strength typically pressures commodity prices and emerging market assets. Monitoring the dollar is essential for timing real asset entries and exits.

For our complete allocation framework across real assets, infrastructure, and income strategies, see The Blackout Fortune Playbook.

Last updated: February 1, 2026 | Data: Yahoo Finance, Invesco filings