Exposure to foreign currency is growing with exchange traded funds (ETFs) as investors are looking to profit from a declining dollar. David Hoffman of Investment News reports this strategy is considered risky by some financial advisors. Some industry insiders say that assuming the dollar will continue to weaken is not a strategy-it’s speculation. Aside from that, currency patterns are highly unpredictable and an investor must be fully educated on a country’s economy and it’s currency before investment.
Using exchange traded products for currency exposure can be helpful, especially if the funds don’t hedge their exposure to foreign currencies. The only reason I haven’t put currency products to use is that my clients are fully invested in the market. If we (Global Trends Investments) had cash available at this point, I think we would consider a foreign currency fund. But investing in a foreign ETF, stock or fund is another way to gain return when the dollar is falling.
For full disclosure, 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.