Accessing Foreign Bonds - Currency ETFs May Be Your Best Bet

by: Roger Nusbaum

Roger Nusbaum submits: In the last twelve hours I have had one email and one comment on the blog about foreign bonds (the email also asked about foreign currency exposure too).

I can not imagine that an individual investor would be better off buying an individual issue as opposed to some sort of product that owns foreign bonds. In many cases there are high minimums for a domestic broker to take an order. While I am not sure what the minimums might be, how many people should put $100,000 into one foreign bond?

I look at this part of the market as trying to capture a particular effect that becomes more important in the face of problems in the US. There are plenty of funds (OEF and CEF) that are easy to access and relatively cheap (you are not going to find a fund that charges 8 beeps like an S&P 500 fund).

The currency OEFs do have some merit but over longer periods of time they may not move a whole lot. Given that I view currency investments as aggressive cash, lots of movement may not be desireable. I would encourage anyone to learn about the currency ETFs. They will not be right for every one, clearly, but there is no harm in studying and considering them.

See more on:

Euro Currency Trust (NYSEARCA:FXE)
DB Currency Index Value Fund (NYSEARCA:DBV)
Australian Dollar Trust (NYSEARCA:FXA)
British Pound Sterling Trust (NYSEARCA:FXB)
Canadian Dollar Trust (NYSEARCA:FXC)
Mexican Peso Trust (NYSEARCA:FXM)
Swedish Krona Trust (NYSEARCA:FXS)
Swiss Franc Trust (NYSEARCA:FXF)