New ETF Tackles the Carry Trade

"There's no other ETF out there that tracks a currency-yield strategy like this," says Rich, who hopes that interest in the fund will grow as investors better understand its strategy. PowerShares plans to work with investment advisers to help boost awareness about how the index operates.

"Up until this point, these strategies were available only to more sophisticated investors or from active managers [who charged] higher levels of fees," he adds.

Because of their low correlation with equities and bonds, currencies are often used to diversify portfolios. But forex transactions, involving either the currencies themselves or stocks traded on an overseas exchange, are often difficult and potentially very costly for investors.

"Once investors get the strategy, we think it should be a good investment vehicle for them as they look to get currency exposure -- as a diversity play or as an actual larger allocation in their portfolios," says DB Commodity Services' Rich.

Like many of the new crop of ETFs, the Currency Harvest fund gives retail investors access to a complicated trading strategy that has delivered high-net-worth clients big bucks, while making that strategy seemingly less complex.

Because it tracks an index, the ETF is very transparent concerning its holdings.

Total fees, including management, could be as high as 81 basis points per year, in line with many of the newer ETFs that act more like actively managed mutual funds. And compared with those funds, the costs of the Currency Harvest fund are competitive.

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