A recent reader asked how he could use exchange traded funds (ETFs) to hedge against a falling U.S. dollar.  The Rydex Currency Shares offer investors this hedge with the Euro (FXE), British Pound Sterling (FXB), Canadian Dollar (FXC), Australian Dollar (FXA), Swiss Franc (FXF), Swedish Krona (FXS) and Mexican Peso (FXM).  The Swiss Franc seems very stable.

Current posts on Seeking Alpha look at the Rydex Currency Shares and whether or not they should be judged by volume alone.  The euro ETF (FXE) has the most volume, but it is not the price leader.  "FXE has been the volume leader of the bunch ever since the others were listed in last summer, but, to use an analogy, Microsoft is not a better proxy for tech solely by the virtue of having more volume than Qlogic," Roger Nusbaum argues. Three of the seven currency ETFs have outperformed FXE: the Mexican peso, the Aussie dollar, and the British pound.


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

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.