Although currency ETFs are not like money markets, bonds, or stocks, they are very simple. Currency ETFs are nothing more than a relationship between two currencies, one of them usually being the U.S. dollar. These relationships fluctuate based on an extenuating number of circumstances ranging from interest rates, political climate and economic and GDP activity.
Some of the many Currency ETFs include:
- CurrencyShares Australian Dollar Trust (FXA), up 3.3% year-to-date
- CurrencyShares Euro Trust (FXE), up 4.2% year-to-date
- WisdomTree Dreyfus South African Rand (SZR), down 1% since July 8 inception
- WisdomTree Dreyfus Japanese Yen (JYF), down 4.5% since May 22 inception
- PowerShares DB US Dollar Index Bearish (UDN), up 1.9% year-to-date
- PowerShares DB US Dollar Index Bullish (UUP), down 0.4% year-to-date
For full disclosure, some of Tom Lydon’s clients own shares of UUP.
Read the disclosure, as Tom Lydon is a board member of Rydex Investments.