Latest news, trends and ideas for investing with exchange traded funds | ETF Commentary

Whether hedging U.S. dollar investments or speculating on global economic changes, exchange traded funds and notes provide an investors with a low-cost way to gain appropriate exposure.

That’s according to the article Other People’s Money which highlights several currency ETFs and ETNs.

For funds that directly hold currencies, the article suggests looking into the Rydex CurrencyShares ETFs including:

CurrencyShares Euro Trust (FXE)

British Pound Sterling Trust (FXB)

Japanese Yen Trust (FXY)

Swiss Franc Trust (FXF)

Swedish Krona Trust (FXS)

Canadian Dollar Trust (FXC)

Mexican Peso Trust (FXM)

Russian Ruble Trust (XRU)

Currency ETFs from WisdomTree include:

WisdomTree Dreyfus Chinese Yuan (CYB)

Brazilian Real (BZF)

South African Rand (SZR)

Indian Rupee (ICN) and

WisdomTree Dreyfus Emerging Currency(CEW)

An ETF that provides exposure to a long-short strategy is the PowerShares DB G10 Currency Harvest Fund (DBV).

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Interested in learning more about currency ETFs? Check out Rydex Investments CurrencyShares page.

The website includes links to weekly commentary and data analysis notes, an overview of the benefits and risks of currency investing and a simple four step process for getting started.

CurrencyShares offers currency ETFs on NYSEArca for:

• Australian Dollar (FXA)
• British Pound Sterling (FXB)
• Canadian Dollar (FXC)
• Euro (FXE)
• Japanese Yen (FXY)
• Mexican Peso(FXM)
• Swedish Krona (FXS)
• Swiss Franc (FXF)

The CurrencyShares product is different from an ETN structure in that it is set up as a grantor trust which means that CurrencyShares represent an undivided interest in currency held in a bank account. ETNs are effectively unsecured promissory notes.

Investors makes money when the value of the currency held by the Trust appreciates relative to the U.S. dollar. It works the other way too. If the currency held depreciates relative to the dollar, investors lose money. Altough earning income and paying interest is not an investment objective of the CurrencyShares Trusts, some do distribute interest.

If you have an interest in the tax implications of investing in currency ETNs and the CurrencyShares Trusts, see Rydex’s note on the recent IRS Ruling 2008-1.

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