Currency ETFs: The “Gone Fishin’” Way to Invest in Currencies

We’re sure you’ve heard of exchange traded funds (“ETFs”). Even though ETFs have only been around 15 years (starting with Standard & Poor’s SPDR back in 1993), it seems ETFs have gone mainstream and become the new “in” investment, much like mutual funds in the ‘90s.

But few mainstream investors take advantage of currency investing with ETFs – considering these special currency ETFs have only been available since 2006.

The official name for the currency ETFs is “Currency Trusts.” At last count, you can buy nine currency ETFs through any normal stock broker. You can buy all right on the New York Stock Exchange, except for the PowerShares DB G10 Currency Fund (DBV) which trades on the AMEX.

These ETFs mimic the spot price of the underlying currency they target – they hold actual currencies rather than futures contracts. A single share of each ETF represents 100 units of the base currency.

Here are some of the major benefits of this product:

Liquid at all times
Trade them as often as you'd like, at anytime during regular market hours
No minimum investment
You can short-sell
You can use margin and enhance your leverage
Price is tied closely to the underlying currency
Hold them as long as you like – no time premium or expiration – so you can ride the long-term trend

Want to know which currency ETFs to buy, sell and trade? Every month, our currency analysts recommend timely ETF recommendations in our monthly members-only newsletter, as a long-term hedge against the buck. Click Here to get a sneak peek at what we see for the dollar’s future, and our monthly newsletter.