This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Top Currency Funds Bet Against Dollar

At 9.2% year-over-year, U.S. producer price inflation in June spiked to the worst in 27 years. Prospects for American businesses, stocks and fixed-income investments remain suspect.

In this climate, the best-performing currency funds in the second quarter were those betting on currencies that performed relatively well versus the greenback.

The best-performing currency fund from March 31 to June 30 is the CurrencyShares Australian Dollar Trust (FXA). The fund is designed to measure the amount of U.S. dollars needed to buy an Australian dollar. So, as the U.S. dollar declines in value, it takes more and more of our dollars to buy the Aussie variety.

The spot value weakened by 4.75% in the second quarter, sending the fund up by 6.71%.

The second-place currency fund is the CurrencyShares Mexican Peso Trust (FXM). As pesos per dollar shrank 3.13% for the period, this fund gained 5.18% on dollar weakness against the Mexican peso.

Both of the above funds are direct plays on specific currencies. If the U.S. dollar strengthens against these two foreign currencies, then these funds are designed to lose money. On the other hand, this next fund tracks an index attempting to determine which currencies are set to appreciate.

The third-place fund, PowerShares DB G10 Currency Harvest Fund (DBV) improved by 5.10% in the second quarter, tracking the Deutsche Bank G10 Currency Future Harvest Index.

The theory behind the index is that currencies of countries with relatively high interest rates tend to rise while those of relatively low interest rates tend to fall. Futures contracts are bought for bullish currencies and sold short for currencies expected to weaken.

Changes in Select World Currencies per U.S. Dollar
Spot Currency Ticker 2nd Quarter Change US Dollar
JAPANESE YEN JPY 6.54% Stronger
NEW ZEALAND DOLLAR NZD 3.12% Stronger
SWISS FRANC CHF 2.82% Stronger
SWEDISH KRONA SEK 1.19% Stronger
EURO EUR 0.21% Stronger
NORWEGIAN KRONE NOK -0.11% Weaker
CANADIAN DOLLAR CAD -0.37% Weaker
BRITISH POUND GBP -0.43% Weaker
MEXICAN PESO MXN -3.13% Weaker
AUSTRALIAN DOLLAR AUD -4.75% Weaker
Source: Bloomberg

Currently the fund's bullish, long position is allocated to one-third each of Australian dollars, New Zealand dollars and Norwegian krones. Plus, the bearish, short position is split to one-third each among U.S. dollars, Japanese yen and Swiss francs.

The four other currencies that can be, but are not currently being, traded include the euro, Canadian dollar, British pound and Swedish krona.

Best-Performing Currency Funds in the Second Quarter
Fund (Ticker) Rating Total Return 2nd Quarter Fund Type
CurrencyShares Australian Dollar Trust (FXA) A+ 6.71% ETF
CurrencyShares Mexican Peso Trust (FXM) A+ 5.18% ETF
PowerShares DB G10 Currency Harvest Fund (DBV) C+ 5.10% ETF
ELEMENTS Linked to the Australian Dollar/U.S. Dollar Exchange Rate ETN (ADE) U 2.67% ETN
Barclays GEMS Index ETN (JEM) U 1.68% ETN
iPath EUR/USD Exchange Rate ETN (ERO) A+ 1.60% ETN
CurrencyShares British Pound Sterling Trust (FXB) A 1.46% ETF
CurrencyShares Canadian Dollar Trust (FXC) B+ 1.02% ETF
iPath Optimized Currency Carry ETN (ICI) U 0.93% ETN
ELEMENTS Linked to the Euro/U.S. Dollar Exchange Rate ETN (ERE) U 0.92% ETN
Source: Bloomberg

For an explanation of our ratings, click here.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

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.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,065.37 -56.64 -0.33%
S&P 500 1,995.47 -4.65 -0.23%
NASDAQ 4,558.4240 -11.1970 -0.24%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs