The recent performance by the U.S. economy coupled with the
poor performance of many European and Asian economies affirms
that the dollar will likely remain the strongest of the group of
Last Friday, the U.S. Dollar Index hit a fresh four-year high
after news out of both China and the eurozone.
There are a number of ways to benefit from the strength of the
dollar via ETFs. Below are a number of ETFs that are directly
affected by U.S. dollar and will likely be affected by its
continued success relative to other currencies around the
The PowerShares DB US Dollar Index Bullish Fund (NYSE:
) is designed for investors who want to track the value of the
U.S. dollar against the six major world currencies: euro,
Japanese yen, British pound, Canadian dollar, Swedish krona and
The most heavily weighted currency in the portfolio is the
euro at 58 percent, followed by the yen at 14 percent and the
pound at 12 percent.
The ETF is up 9 percent year to date and up 10 percent over
the last six months. A higher expense ratio of 0.8 percent is
normal for an ETF such as this given the specificity.
When There's A Pullback On A Bull, Look At These
An ETF that invests in Japanese equities and is short the
Japanese yen is another option for investors that want exposure
to the U.S. dollar rising against the yen.
The ETF is not a pure currency play; however, the Japanese
equity markets have been moving in the opposite direction of the
yen and therefore could give the ETF an added boost. The
WisdomTree Japan Hedge Equity Fund (NYSE:
) is made up of 317 Japanese equities as well as 27 short and
long currency contracts for the yen and dollar.
The top holdings in the ETF are Toyota Motor Corp (NYSE:
) at 5.4 percent, Mitsubishi UFJ Financial Group (NYSE:
) with a 4.9 percent holding and Japan Tobacco Inc coming in at
3.8 percent. DXJ is up 8 percent year to date and 19 percent over
the last six months. Investors should be aware that an ETF such
as this is a doubled-edged sword.
As it capitalizes on both the rising equities and the falling
currency in Japan, it will be negatively affected by falling
equities and a rising yen, making it a high-risk and high-reward
2 Defense ETFs Breaking Out
A couple other ETFs that take advantage of the struggling euro
and yen are the ProShares Short Euro (NYSE:
), which shorts the euro that has been struggling lately, and the
ProShares Ultra Short Yen (NYSE:
), which shorts the struggling yen.
A U.S. Dollar ETF provides a way to capitalize on the
expanding economy in the U.S. along with the continued struggle
of countries within the eurozone as well as Japan.
It is important however to keep an eye on the status of the
dollar, since it has not seen levels such as this since
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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