Japanese Yen ETF Investing 101
Wednesday, December 9th, 2009Michael Johnston submits:
On the issue of currencies, investors are somewhat divided. Some prefer to avoid currency investing altogether, likening the activity to high-stakes gambling that can lead to big swings in fortunes in a matter of minutes. While this might be an accurate portrayal of leveraged forex trading, proponents of including currencies as an asset class within portfolios point out that unleveraged investments actually exhibit low volatility, and can add valuable diversification benefits to a portfolio.
Judging by activity in the ETF industry, it seems clear that more and more investors are making at least a small allocation to currencies in their portfolios. According to the latest data from the National Stock Exchange, currency ETFs saw cash inflows of about $2.3 billion through the first 11 months of 2009, almost ten times the cash flows from the same period in 2008.
