Forex Blog: Currency Trading News & Analysis.

June 27th 2005

New mutual funds track currency movements

Currencies have become especially volatile over the last few years.  The Dollar and the Euro are prone to wild swings, which can be magnified through leverage. The Yuan, meanwhile is the subject of endless debate and speculation. Forex trading, however, is extremely risky.  Short term currency movements can be impossible to predict, and risk is often high as result of leverage. In response, several new mutual funds have been created, to allow investors to track long-term trends in currencies. Profunds has created two diametrically opposed funds, allowing investors to bet on or against the USD. Rydex funds recently introduced a leveraged currency fund, which could potentially magnify gains (and losses). One mutual fund, the Franklin Templeton Hard Currency Fund, has existed for over a decade, and has averaged a 7% annualized return.   The Wall Street Journal reports:

Studies have shown that currency funds have no history of tracking the movements of U.S. and foreign stocks and bonds, or most hedge
funds. Currency funds have existed for a while in Europe and Asia and there is no reason why they should be excluded from U.S. portfolios.

Read More: Placing Bets While the Dollar Gets Gussied Up

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Posted by Adam Kritzer | in Investing & Trading | No Comments »

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