As investors look to hedge their bets, they're turning more and more to currency funds, according to Investor's Business Daily.
"We frankly were hearing a lot of demand for such a product," said Michael Sapir, CEO of
The index is based on the weighted average of the euro, yen, pound, the Canadian dollar, the Swedish krona and the Swiss franc. The most weight - 70% - is given to the yen and euro. The Rising Dollar fund has posted $59.8 million in inflows, while the Weakening Dollar has taken in $20.3 million.
Since the 2005 launch of the ProFunds Dollar-tracking funds, rival
Overseas investments have boomed in the past year. According to
"The last annual high was in 1997 ($41.5 billion) also the year - go figure - that the Asian financial crisis roiled the world financial markets," wrote Joseph Quinlan, chief strategist at Bank of America's Investment Strategies Group, in a Feb. 16 letter to clients.
This year, however, things may change, Quinlan warned.
"The two variables that have led emerging markets to outperform - easy global credit conditions and robust U.S. consumer spending - are set to turn this year," he wrote.
Currency funds can be volatile, and may not be right for a do-it-yourself investor. In May alone, the ProFunds Rising Dollar fund increased from $20.8 million to $89 million. Likewise, the USDX gained 3.9%, going from 84.43 to 87.76.
But in August, the Rising Dollar fund plummeted, going from $91 million to $51 million. The USDX dropped 2% that month.
Currency funds are far riskier than regular mutual funds, according to Michael Archer, co-author of a new book "Getting Started in Currency Trading."
"Unless you are willing to devote substantial time to trading currencies, either a fund or professional money manager is the way to go," said Archer.