A : The G10 currency universe
includes U.S. Dollar, Euro, Japanese Yen, Canadian Dollar, Swiss Franc,
British Pound, Australian Dollar, New Zealand Dollar, Norwegian Krone and
Swedish Krona.
B : The following counries'
currencies are represented in this fund: Brazil, Chile, China, the Czech
Republic, Hungary, India, Israel, Malaysia, Mexico, Poland, Russia,
Singapore, South Africa, South Korea, Taiwan, Turkey, and Thailand.
C: The eight Asian currencies
include the Indonesian rupiah, the Indian rupee, the Philippine peso, the
South Korean won, the Thai baht, the Malaysian ringgit, the Taiwanese
dollar and the Chinese yuan.
D : The fund provides exposure
to 5 currencies: Hong Kong dollar, Singapore dollar, Saudi Arabia riyal,
United Arab Emirates dirham, and Chinese yuan.
Advantages of Currency ETFs:
Currency ETFs are unrelated to
any stock or bond market: Currency ETFs invest exclusively in the currency
itself — CASH MONEY. You NEVER own a single share of stock or any kind of
bond.
They shield you from failing
institutions: Since you never invest in a financial institution or
corporation that could default, currency ETFs insulate you from the debt
crisis. The debt crisis CAN help drive some currencies HIGHER — another
great OPPORTUNITY to PROFIT from the crisis.
Your investment pays you interest: Since your money is in cash, it pays
interest ON TOP of any profit you earn as the currency rises. In fact,
with many currency ETFs, the interest yield is higher than what you can
make in any money market.
You can profit from moves in EVERY major currency: You can buy an ETF
devoted to the U.S. dollar, the euro, the Japanese yen, the Australian and
Canadian dollars and many more. Plus, because there are also INVERSE
currency ETFs, you can make money when a currency is rising OR when it’s
falling!
Low minimum investment: Because currency ETFs are simply shares traded on
the exchange, you can start with just a single share for $25 or less. So,
with a couple of thousand dollars you can buy a whole range of different
ETFs across several different currencies. Or you can give our strategy a
try with a tiny stake.
They’re cheap to own, too: With currency ETFs, you also avoid the big
loads (sales charges) that some mutual funds require. When you buy and
sell, you do have to pay a broker commission, of course. But if you use a
discount or online broker, your commission costs can be slashed to the
bone.
No trading limits to slow us down: Most mutual fund families discourage
frequent switching. If you jump too soon too often, they may send you a
nasty-gram to restrict your trading. With ETFs, aside from the tiny
commissions you pay, switching is not an issue. Plus, unlike mutual funds,
ETFs are priced continually throughout the trading day: You can buy or
sell whenever you want to!
They’re the soul of simplicity to buy and sell: Since currency ETFs are
traded on the exchange much like stocks, you can use stops-loss orders to
help protect your profits or cut a loss. Plus you can buy and sell at
better prices by using limits — orders to your broker that specify the
minimum or maximum price you’ll accept.
Currency ETFs are available with DOUBLE leverage! With these
ETFs, your investment moves 20% for every 10% move in the currency.
Risks of Currency ETFs
The value of the shares of a currency ETF relates directly to the value of
the foreign currency held by the particular product. This creates a
concentration risk associated with fluctuations in the price of the
applicable foreign currency. Unique risk factors of a foreign currency
include national debt levels and trade deficits, domestic and foreign
inflation rates, domestic and foreign interest rates, investment and
trading activities of institutions and global or regional political,
economic or financial events and situations.
