It is hard to lose interest in the Currency markets given the recent volatility that persists through today even, following the Scotland independence results.
The Euro, observable via FXE (CurrencyShares Euro, Expense Ratio 0.40%), is trading at a fresh new 2014 low today, and the British Pound, observable via FXB (CurrencyShares British Pound, Expense Ratio 0.40%) is actually down today after running up this week on the perception that Scotland would vote “no”, which they of course did.
Even the Japanese Yen is not seeing any respite just yet after its large gap down earlier this week, and FXY (CurrencyShares Japanese Yen, Expense Ratio 0.40%) is trading at its lowest levels since inception.
With currency volatility heightened in the current global environment, “Currency Basket” type ETFs should likely appeal to individual investors if not portfolio managers and ETF strategists whom want exposure to the space, but are hesitant to pick one or two single currencies alone and hope that they select the correct ones.
DBV (PowerShares DB G10 Currency Harvest Fund, Expense Ratio 0.81%) comes to mind, although the fund has been around since 2006 and only has about $161 million in assets under management. According to ETFdb.com, “The index is comprised of currency futures contracts on certain G10 currencies and is designed to exploit the trend that currencies associated with relatively high interest rates, on average, tend to rise in value relative to currencies associated with relatively low interest rates.”
Currently, the portfolio has long positions in the Australian Dollar (AUD), the Norwegian Krone (NOK), and the New Zealand Dollar (NZD), with about a third of the portfolio apiece across these positions. Then, it has short positions in The Swiss Franc, the Euro, and the Japanese Yen, all of which have had tough sledding recently.
DBV should see increased trading interest provided global currency volatility remains the norm, and of course as portfolio managers familiarize themselves with what the product sets out to do.