As of today, exchange traded funds (ETFs) are the easiest way to add currency exposure to a portfolio. Roger Nusbaum for Seeking Alpha reports that holding foreign currency can be just as important as equities and fixed income. Perhaps in the future we will see brokerage firms allow the purchase of foreign currency in brokerage accounts for accessibility.  But until then, ETFs are the easiest way for an individual to buy currencies.

Currently, Rydex offers the most options for currencies through their CurrencyShares.  Investors can buy currencies around the globe, from the euro, to the Mexican peso to the Japanese yen.  PowerShares offers three ETFs with currency exposure.  One is futures based on G-10 currencies and the others are bullish and bearish on the U.S. dollar.  Through their exchange traded notes (ETNs), Barclays offers exposure to the yen, euro and British pound.

Holding currency is not without risk and investors need to be sure they understand what they are adding to their portfolio.

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

Tags: Currency ETFs, ETNs