Important Currency ETFs For The Rest Of 2013
Benzinga | Apr 19, 2013 12:43AM ET
To clear up that headline, it will not be U.S. dollar or euro ETFs that are addressed here.
Even the Japanese yen will be skirted to some extend. There are plenty of other currencies that can be accessed via ETFs that could present opportunities to investors for the remainder of 2013 from both the long and short sides.
Some of the options presented here can be viewed as obvious choices. Others are potential safe-haven alternatives to the U.S. dollar. While it can be said that currency ETFs are not necessarily as exciting as trading forex in the spot market, they do give investors one more avenue for diversifying away from the U.S. dollar.
Of course that is assuming investors even want non-dollar exposure. That could be a tough sell with the PowerShares DB US Dollar Index Bullish (NYSE: non-easing nations , the carry trade is back. Ordinary investors that do not want to execute their own carry trades in the forex market do not need to fret because DBV is a de-facto carry trade ETF.
The $366 million ETF tracks an index that is "is composed of currency futures contracts on certain G10 currencies and is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates," according to PowerShares.
While DBV can use the entire realm of G10 currencies, its current holdings include long positions of 33.33 percent each in the Australian and New Zealand dollars and the Norwegian krone. DBV's short positions are 33.33 percent each allocated to the euro, yen and Swiss franc. The ETF is up 4.4 percent year-to-date.
BY The ETF Professor
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