Currency exchange traded funds (ETFs) are gaining popularity as the dollar is weakening, performance is up to par and they pay dividends based on foreign interest rates. Dan Caplinger for The Motley Fool says currency ETFs based on the value of other country’s currencies have made it easier for investors to bet on the direction of the dollar.  Take CurrencyShares for example:

  • CurrencyShares Euro Trust (FXE) Each share of this represents 100 euro.
  • CurrencyShares Japanese Yen Trust (FXY) holds 10,000 yen per shares.

By deciding how many shares to buy, the investor can control how much exposure they want to foreign exchange. Dividends are also paid out, as in the CurrencyShares Australian Dollar Trust (FXA) which pays 6.13%; CurrencyShares British Pound Trust (FXB) offers 5.43%. FXE pays out 3.77%.


For full disclosure, Tom Lydon is a member of the board for Rydex Investments.

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.