The following is a collection of data related to Currency ETFs from Investopedia, Yahoo Finance and Seeking Alpha

How Currency ETFs Work

ETF management firms buy and hold currencies in a fund. They then sell shares of that fund to the public. You can buy and sell ETF shares just like you buy and sell stock shares. Investors value the shares of the ETF at 100 times the current exchange rate for the currency being held. For example, let's assume that the CurrencyShares Euro Trust (PSE:FXE) is currently priced at $136.80 per share because the underlying exchange rate for the euro versus the U.S. dollar (EUR/USD) is 1.3680 (1.3680 × 100 = $136.80).

You can use ETFs to profit from the exchange rate of the dollar versus the euro, the British pound, the Canadian dollar, the Japanese yen, the Swiss franc, the Australian dollar and a few other major currencies.

What makes currencies move?

Unlike the stock market, which has a long-term propensity to rise in value, currencies will often channel in the very long term. Stocks are driven by economic and business growth and tend to trend. Conversely, inflation and issues around monetary policy may prevent a currency from growing in value indefinitely.

Currency pairs may trend as well, and there are simple factors that influence their value and movement. These factors include interest rates, stock market yields, economic growth and government policy. Most of these can be forecasted and used to guide traders as they hedge risk in the rest of the market and make profits in the forex.

                                                Major Currency ETFs

Euro ETFs





Long Euro ETF

CurrencyShares Euro Trust




WisdomTree Dreyfus Euro




iPath EUR/USD Exchange Rate ETN




Double Long Euro ETF

Ultra Euro ProShares




Market Vectors Double Long Euro ETN




Short Euro ETF

Market Vectors Double Short Euro ETN




UltraShort Euro ProShares




Japanese Yen ETFs





Long Yen ETF

CurrencyShares Japanese Yen Trust




WisdomTree Dreyfus Japanese Yen




iPath JPY/USD Exchange Rate ETN




Double Long Yen ETF

Ultra Yen ProShares




Short Yen ETF

UltraShort Yen ProShares




US Dollar ETFs





Long US Dollar ETF

PowerShares DB US Dollar Index Bullish ETF




Short US Dollar ETF

PowerShares DB US Dollar Index Bearish ETF





Currency Specific Funds



Expense Ratio





 Japanese Yen



 Australian Dollar



Canadian Dollar



Chinese Yuan



Swiss Franc



Brazilian Real



British Pound



Indian Rupee



Swedish Krona



Singapore Dollar


Currency ETFs are for those who are looking to speculate or hedge foreign currencies.

A currency exchange traded fund attempts to track the movement of a particular currency pair such as the EUR/USD. The fund will also aim to into account the differences in interest rates between the two currency pairs. There are now a good number of currency exchange traded funds that cover many of the major currency pairs.

US Dollar ETF   There are many US Dollar Exchange traded funds, that aim to track the currency against the pound, euro, swiss franc and many more.

Euro ETF Formed in 1999, the euro/dollar currency pair has become the most liquid currency pair traded on the currency markets. There are many euro exchange traded funds including short euro etfs and inverse euro etfs. Some of the most well know euro ETFs include:

     FXE – CurrencyShares Euro Trust

     EU – WisdomTree Dreyfus Euro ETF

     ERO – iPath EUR / USD Exchange Rate ETN


Japanese Yen ETF    The Japanese Yen has been a popular currency over the years. Throughout the late 1990s and early 2000s it has the lowest interest rate interest rate of all the developed nations, this attracted a lot of carry traders trying to profit from the low rates. Some Japanese Yen exchange traded funds include:

     JYN – iPath JPY / USD Exchange Rate ETN

     JYF – WisdomTree Dreyfus Japanese Yen ETF

     FXY – CurrencyShares Japanese Yen Trust

What are Inverse Currency ETFs?

These are funds that aim to track a currency in reverse. For example if the US dollar went down by 2% in a week, an inverse US Dollar ETF would aim to go up 2% and vice versa.

A few examples of Inverse Currency ETFs include:

     YCS – ProShares UltraShort Yen ETF

     EUO – ProShares UltraShort Euro ETF

     DRR – Market Vectors Double Short Euro ETN

     UDN – PowerShares US Dollar Bearish ETF

Should I trade a currency ETF?

If you are looking to speculate or hedge currencies, ETFs are certain one option. There are both long and short currency ETFs, so you can make money whichever way the market moves.

For the investor who is new to trading currencies and doesn’t want the hassle of learning how forex brokers work, a currency ETF is likely to be the best option.

For an experienced currency trader, buying and selling currencies through a forex broker is likely to be the best option. Currency pairs can also be traded via the futures market as well.

Are currency ETFs risky?

This is a very easy to answer question. The short answer is a big “YES”. Currency trading must always be considered to be high risk. The currency market is often very difficult to predict even for the seasoned professional traders.

Where can I buy Currency ETFs?

Currency Exchange traded funds can be bought and sold just like a regular stock through a stock brokerage firm. There are many stock brokers to choose from, but you will definitely want to make sure that you are getting a good deal for your hard earned money.

How to Calculate the Total Cost of an ETF

By October 31, 2012 4:00 PM

While everyone can just sit back and enjoy the expense ratio cuts as the result of the so-called fee war, investors should still be wary of other costs to trading exchange traded funds.

Expense ratios are not the only costs associated with ETF investments. Bid-ask spreads – the price difference between the buying price and the selling price – and commission fees are just some other factors to consider.

The bid-ask spread is found by taking the bid subtracted from the ask, divided by the share price and multiplying by 100. [Bid-Ask Spread]

“The ETF expense ratio is an ongoing annual charge, whereas the bid-ask spread and commission costs are at the time of a transaction,” Joel Dickson, senior ETF strategist at Vanguard , said in a Wall Street Journal article. [Video: Vanguard's Joel Dickson]

Michael Iachini, managing director of ETF research for Charles Schwab Investment Advisory Inc., though, has offered a simple formula to convert expense ratios, bid-ask spreads and commission fees to a single per-year percentage expense:

     First off, the expense ratio remains as a percentage.

     The per-year, bid-ask spread percentage is calculated by dividing the current spread with the holding period. For instance, if an investor holds a fund for half a year, the spread is divided by 0.5, and if the fund is held for 2 years, divide by 2.

     Lastly, the commission is taken out whenever you buy or sell a fund, unless the brokerage offers commission free trades. The commission per-year percentage conversion is taken by multiplying the commission fee by 2, divided by the total dollar amount invested and then multiplying by 100.

     ETF investors can then add up the three numbers to calculate the total annual cost in percent terms.

Since the calculations are based on a time component, the total cost for long-term holders will inevitably be lower than for short-term traders.

Additionally, potential investors should be aware of other implicit costs, like premiums or discounts to underlying holdings, that may hurt or help performance. [Premiums and Discounts]

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