How to Play China and a Weak Dollar with ETFs

Forbes columnist Jim Lowell takes a look at the investment implications of a strong China and a weak dollar in his column Riding China’s Wake.

Lowell recommends taking a position in the commodities that feed China’s growth machine through the PowerShares DB Commodity Index (DBC). DBC tracks an index that is rules-based and composed of futures contracts on six of the most heavily-traded and important physical commodities in the world – crude oil, heating oil, gold, aluminum, corn and wheat.

Lowell actually recommends a bullish stance on the dollar based on the view that Bernanke will do whatever it takes to ensure that the dollar retains its status as the world’s reserve currency. If you agree with him, consider the PowerShares Dollar Bull (UUP), an ETF that holds futures contracts designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Another currency play noted by Lowell is the PowerShares DB G10 Currency Harvest Fund (DBV) , a fund that owns currencies with higher interest rates which tend to rise in value relative to those with lower interest rates.

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