The US dollar has fallen 4.5 percent against the euro this year and 4 per cent against sterling, hitting a new 26 year low against the pound last week. This dollar weakness translates into a boost in performance for international and country specific ETFs, SeekingAlpha reports.
International or country specific ETFs, are not hedged against the dollar so that strength in the underlying currency, such as a stronger Singapore dollar captured through the Singapore ETF (EWS), boosts returns for U.S. dollar based investors.
Rydex also offers a series of foreign currency ETFs such as the CurrencyShares British Pound Sterling (FXB), the CurrencyShares Euro (FXE), and the CurrencyShares Canadian Dollar (FXC).
A couple of Chartwells seven model ETF portfolios have a small position in PowerShares DB G10 Currency Harvest (DBV) which is up 14 percent year to date. It tracks 10 currencies, going long on the top three currencies with the highest interest rates and going short on the “top tier” three currencies with the lowest interest rates. DBV is currently long on the Australian dollar, the New Zealand dollar and the Pound sterling and short on the Japanese yen, the Swiss franc and the Swedish kroner.