Forex Funds for Bulls and Bears
In recent years, the weak dollar has helped boost the appeal of foreign stocks and bond funds, as the returns generated by these securities look even better when converted into dollars and cents. But there's also growing interest in a relatively new investment category: funds that invest directly in foreign currencies.
Currency funds can provide investors with exposure to international markets without the risk of the individual companies that issue stocks and bonds -- which could be particularly appealing now that foreign stock and bond funds have had such a strong run. They also can be used to hedge specific holdings that are particularly exposed to currency shifts.
The first few offerings in this category were open-end mutual funds, but over the past year or so, a number of exchange-traded funds that track currencies have been launched, providing some low-cost options for investors who are active traders.
While there are reasons to believe the dollar will remain weak, given America's imbalance of trade with the rest of the world and the relatively stable outlook for interest rates here, exchange rates can be volatile.PowerShares, a unit of Amvescap (AVZ), is getting ready to roll out two ETFs based on the Deutsche Bank U.S. Dollar Index Future Excess Return Index. The PowerShares Deutsche Bank U.S. Dollar Index Bullish Fund, which will list on the American Stock Exchange under the symbol UUP, will track the value of the dollar in relation to a basket of six major currencies -- the euro, the yen, the British pound, the Canadian dollar, the Swedish krona and the Swiss franc -- while the PowerShares Deutsche Bank U.S. Dollar Index Bearish Fund, which will trade under the ticker UDN, will be negatively correlated with the index.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV