CHICAGO, April 20, 2012 /PRNewswire/ -- Stocks and funds in this article include: PowerShares DB G10 Currency Harvest Fund (DBV), WisdomTree Dreyfus Emerging Currency Fund (CEW), iPath GEMS Asia 8 ETN (AYT). Eric Dutram looks at three ways investors can bet against the dollar with currency ETFs.Eric Dutram of Zacks Investment Research:
Yet while the dollar has held firm in 2012, many investors remain long term bears on the world's reserve currency due to America's many economic issues. Debt levels are quite high at all levels of the American economy—federal, state, personal—and inflation has begun to creep higher in recent months (see Is The Bear Market For Bond ETFs Finally Here?).
Thanks to this, many analysts are advocating that investors position their portfolios to take advantage of the rise of alternative currencies or at least to spread their currency risk around. Unfortunately, this is generally difficult to do in a direct way as it usually requires a futures account or a gamble on the risky forex market where 200% leverage isn't uncommon.
As a result, investors who are taking a more long-term approach, or are at least trying to remove some of the dollar risk from their portfolio, could be better served by looking at any number of short-dollar currency ETFs. Below, we highlight three of these funds which can all offer a basket approach that bets against the dollar, a strategy that can help investors to profit when confidence in the U.S. is tumbling or at the very least, reduce U.S. investment concentration.
PowerShares DB G10 Currency Harvest Fund (DBV)
While not strictly a 'short-dollar' ETF, this fund's strategy makes it likely to be going up against the greenback on a pretty regular basis. That is because the fund tracks the Deutsche Bank G10 Currency Future harvest Index which looks to go long in developed market currencies that have relatively high yields and take short positions in currencies that have relatively low interest rates (read Commodity Currency ETFs Surge On Global Liquidity Push).
Thanks to this focus and the ultra-low interest rate policy from the Fed, this currency ETF ends up taking a large short position in the greenback. Along with the dollar, the product is also short in yen and Swiss francs, giving a nice mix from a geographic perspective.
In terms of long exposure, three commodity currencies dominate the list. The Norwegian krone, the Australian dollar, and the New Zealand dollar each receive a weighting of at least 30% giving the fund a definite tilt against the American currency.
For the rest of this ETF article, please visit Zacks.com at: http://www.zacks.com/stock/news/73324/bet-against-the-dollar-with-these-three-currency-etfs
Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113
Follow Eric on Twitter: http://twitter.com/ericdutram
Join Zacks on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
SOURCE Zacks Investment Research, Inc.