Over the past year, the Swiss franc has gained 20% against the euro, and 33% against the U.S. dollar. The CurrencyShares Swiss Franc Trust (NYSEArca: FXF) is up about 4% over the past month and up nearly 2% for the past 10 days. The ETF has more than $1 billion in assets, and investors have treated the fund as a safe-haven as of late, similar to gold.
‘There doesn’t appear to be any end in sight to the U.S. debt debate,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex, and Ueda Harlow, Inc. for Reuters. “It’s not good for risk appetite. Safe-haven currencies such as the Swiss franc and yen are likely to be bought.”
In uncertain times, it makes sense to have an exit strategy in place. While these currencies have performed well lately, there is no guarantee they will continue on the same path. We prefer to keep it simple with trend following: when a position is above the 200-day moving average, it’s a buy signal; when it’s below, it’s a sell. Additionally, potential investors may want to take a look at our ETF Analyzer Tool to find emerging markets that are performing. [ETF Trend Following Plan.]
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.