Hi, I want to move about half of my cash into currency ETFs. Long term capital preservation, or minor low-risk growth, is the goal so I'm not going to use much leverage (if at all). I'm thinking 30% - Chinese Yuan 10% - Indian Rupee 10% - Brazilian Real These funds will be treated like a long term CD. No trading, no tracking, no stops. Do you guys see this as fairly safe in the long term? Or should I add some Euro/Yen? To be honest I'm not sure how those would affect long term risk overall--half my capital is still in USD.
Read small text in ETF description. Chinese Yuan, Indian Rupee... These a currencies are subject to strict government control and a foreign speculator, such as a fund, can't trade these currencies outright. Most likely ETFs gain exposure to these currencies via non-deliverable forwards (or NDF). If it is the case, the ETF performance may be significantly different from the underlying currency. Because NDFs based on non-deliverable currencies cannot be hedged with the underlying currency, the market is more like betting on sports events where the price of a NDF already factors in any currency appreciation expected by the market.
Thanks for the insight I guess I may just need to open some foreign bank accounts & figure out how to get my money over there
definitely india. great annum interest rate and you can be sure that it will stay so for the next 10-20 years. Looking at the demographics of the place, young people, it will grow even further. There are many other reasons too, but all this in short.