Currency traders who are interested in the strategy can take a look at the PowerShares DB G10 Currency Harvest Fund (NYSEArca: DBV) as one avenue to put on a carry trade without directly tapping the forex spot market.
DBV’s underlying Deutsche Bank G10 Currency Future Harvest Index is comprised of currency futures contracts on certain G10 currencies and is designed to exploit the trend that currencies associated with high interest rates tend to rise in value relative to currencies with low interest rates. The G10 currency basket includes U.S. dollars, euros, Japanese yen, Canadian dollars, Swiss francs, British pounds, Australian dollars, New Zealand dollars, Norwegian krone and Swedish krona.
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Specifically, the index takes a two-to-one leverage, going long currency futures with relatively high yielding rates and taking short positions in currencies with low yielding interest rates. DBV is currently long 33.0% New Zealand dollar, 32.9% Australian dollar and 32.0% Norwegian Krone while short -31.3% Swedish Krona, -31.5% Swiss franc and -31.9% euro.
DBV is up 4.9% year-to-date and 8.7% higher over the past year.
For more information on world currencies, visit our currency ETFs category.
PowerShares DB G10 Currency Harvest Fund