D-I-Y currency ETF

2 Jun

Ever since we published the list of currency ETFs and the strong relative performance of some of them,  I have been mooting bundling some of them to form a sub-portfolio or blended currency ETF equivalent that might offer reasonable returns, especially in the current market where equities — or some/most/all (pick your choice) of them — have become unattractive.

My choices rather rely on the Dollar not roaring back, but I don’t see that happening anytime soon although we will have to see what happens after QE2 comes to an end.  My choices are all European but somewhat independent of each other:

  • Swiss Franc FXF
  • Euro FXE
  • Swedish Krona FXS

Since May 2nd this trio equally weighted would have returned -0.87% while SPY (proxy for the S&P500) returned -3.3%.  For the YTD the return is +9.11% vs SPY’s 3.68%.  While it will not be included in my portfolio, the more adventurous may wish to add the Russian Ruble XRU.  In the May 2nd to date time frame it increases the downside to -1.19%, but for the YTD increases return to 9.49%.  These are buy-and-hold scenarios.   I am going to try a couple of timing models and will report back if the extra work pays off in significantly increased returns.

I based the portfolio around the Swiss Franc,and have overlayed the other ETF lines in this chart FYI:

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