Betting the Dollar will Fall. Or Rise. Whatever.

[Kevin20]

Think the dollar will continue to fall? Think it's bottomed out? Been hearing those radio ads for foreign exchange and want to be a high roller on the exchanges with next month's disability check?

 

Anyway I'd forgotten all about this but a couple years ago when i had a lot of time on my hands I started organizing some mutual funds and ETFs into a database.

 

I was just looking over that and interestingly there is a mutual fund that is designed to serve as a proxy for the U.S. dollar's performance. Two actually. And they give you a chance to play the dollar without suffering the inevitable implosion and margin call you'll get if you're crazy enough to open a Forex account.

 

If you think the dollar will fall, check out the ProFund Falling US Dollar Fund (FDPIX).

 

If you think this has all gone too far and the dollar is going to rise, you want ProFund Rising US Dollar Fund (RDPIX).

 

Personally I'd be cautious about using these things -- at least that's what I tell myself to contain my gunslinger urges. But it's interesting they exist.

[hegemony]

how can a cash account justify such expenses?

[Kevin20]

how can a cash account justify such expenses?

 

 

What are you talking about? You do realize no load mutual fund historical returns are net of fund expenses, right? Or do you mean that it's a lame return?

[hegemony]

how can a cash account justify such expenses?

 

 

What are you talking about? You do realize no load mutual fund historical returns are net of fund expenses, right? Or do you mean that it's a lame return?

um...a fund that only holds currency with an expense ratio over 1.4% seems expensive.

 

I was not talking about the return, but yes 3 year annualized 4.87% sucks (for FDPIX).

[hegemony]

RDPIX 3 year annualized 0.06%

Expense ratio 1.49%

[hegemony]

Kevin,

 

I was not saying they were worse options than trading forex; just that the expenses seem high for what the funds do.

[LustfortheMoment]

Personally I'd be cautious about using these things -- at least that's what I tell myself to contain my gunslinger urges

 

Kevin, these funds are popguns compared to the REAL gunslinging in the futures and FOREX markets. ONE euro contract on the CME controls around $188,750 with only $2100 in margin; we're talking here about leverage of 90:1 . If you want some heart stompin' action, come on down!!!!!!!!!!!!

Edited February 28, 2008 by LustfortheMoment

[Kevin20]

Personally I'd be cautious about using these things -- at least that's what I tell myself to contain my gunslinger urges

 

Kevin, these funds are popguns compared to the REAL gunslinging in the futures and FOREX markets. ONE euro contract on the CME controls around $188,750 with only $2100 in margin; we're talking here about leverage of 90:1 . If you want some heart stompin' action, come on down!!!!!!!!!!!!

 

 

Yeah, someday maybe, but I have managed to blow out a margin account levered a whole lot less than 90:1!

 

Anyway these are silly funds, I just think it's interesting they exist -- one for long, one for short. I haven't actually read the prospectuses to see how they attempt to track the currency, but even the winning returns are slight, for a $15,000 buy-in no less.

 

There was another fund that simulated shorting Treasury Bonds. Can't remember what that was.

[Athena53]

For those of us who aren't gunslingers, there are also mutual funds that have a heavy component of companies outside the US. I've got Capital World Growth and Income Fund (CWGIX) but there are plenty of similar no-load funds (PRWCX, for example, which I also have). The increases in these funds due to the sinking dollar have helped me feel better about the fact that European vacations are getting out of reach now.

Edited February 28, 2008 by Athena53

[Jen23514]

ttt

[Nummerkins]

You could just buy FXE and bet on the Euro. Much cheaper than mutual funds and way easier than Forex.

[Kevin20]

You could just buy FXE and bet on the Euro. Much cheaper than mutual funds and way easier than Forex.

 

 

Yep you're right, I wasn't aware of the currency ETFs when I started this thread, they've all appeared in the past couple of years. There is a whole series of them at the link below. The beautiful thing is that you can easily short those babies as well as go long. And at some moment pretty soon I suspect, that would be a good move.

 

http://www.currencyshares.com/