David Reilly of Rydex Investments wrote an article for Investment News about currency investment as a unique asset class.  With currency exchange traded funds, investors have easy access to add currencies to their portfolio.  Reilly looks at the potential and misconceptions about currencies.

• Currencies can enhance portfolio returns and lower volatility;
• Currency is independent of stock and bond prices and can be a way to diversify risk and introduce new sources of return;
• Investing in stocks of multinational companies that trade in the U.S. does not provide global currency exposure – doing so ignores the high correlation of those stocks to the U.S. market on which they trade;
• Currency market is not necessarily volatile and erratic – looking at historic patterns the U.S. dollar has moved in cycles that have lasted for a period of years, not days or weeks.

Rydex currently offers seven ETF Currency Shares, Euro (FXE), British Pound Sterling (FXB), Canadian Dollar (FXC), Australian Dollar (FXA), Swiss Franc (FXF), Swedish Krona (FXS) and Mexican Peso (FXM).

Read the disclosure, as Tom Lydon is a board member of Rydex Funds.

Tags: Currency ETFs