Last Updated on Friday, 26 March 2010 09:49 Written by admin Thursday, 25 March 2010 07:25

Swiss Franc ETFs

You can simplify your currency trading by investing in the Swiss Franc using Exchange Traded Funds (ETFs). The symbol for the Swiss Franc ETF is FXF. The name for this ETF is the CurrencyShares Swiss Franc Trust. If the Swiss Franc is undervalued according to the Big Mac Index, buy FXF taking into account the Big Mac Index investing time-frame issue. Here is the description of FXF:

The CurrencyShares Swiss Franc Trust is designed to track the price of the Swiss Franc net of the Trust’s expenses, which are expected to be paid from the interest earned on the deposited Swiss Francs.

Swiss Franc ETF = FXF

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If you think the Swiss Franc will appreciate against the dollar specifically you could invest in the SZE. This is a description of the purpose of SZE:

The ELEMENTS U.S. Dollar/Swiss Franc Exchange Rate ETN is designed for investors who anticipate that the Swiss franc will appreciate against the U.S. dollar. The fund tracks the performance of the U.S. Dollar/Swiss Franc exchange rate plus the returns received on overnight deposits in Swiss Francs.

Swiss Franc vs. Dollar ETF = SZE

Last Updated on Thursday, 18 March 2010 12:07 Written by admin Thursday, 18 March 2010 12:07

Seeking Alpha has once again published investment advice based on the 2010 Big Mac Index and ETFs that track the currencies in the Big Mac Index. In short, the Big Mac Index indicates that some currencies are undervalued and some are overvalued. If you invest long in the undervalued currencies and short in the overvalued currencies, you would profit since currencies tend toward Purchasing Power Parity.

Go long on these currencies:

Chinese Yuan (CYB)
Russian Ruble (XRU)
South African Rand (SZR)
Mexican Peso (FXM)
British Pound (FXB)

Go short on these currencies:

Swiss Franc (FXF)
Euro (FXE) or (long ultrashort EUO)
Canadian Dollar (FXC)
Australian Dollar (FXA)

Click here to see the rest of this article at SeekingAlpha.com.

Last Updated on Saturday, 13 February 2010 08:40 Written by admin Wednesday, 10 February 2010 09:14

The following article is from Seeking Alpha. In short, they are tracking ETFs that mirror currencies represented in the Big Mac Index. The theory is that if you buy currencies that are undervalued according to the Big Mac Index, and short currencies that are overvalued, you will make money when the value of the currencies converge which they tend to do. Of course, you can profit this way either using ETFs which track currencies or by buying and selling the currencies themselves on the foreign exchange market.

From Seeking Alpha …

Although the validity of the Big Mac index in determining the value of currencies in the real world is suspect, it is still an intriguing idea nonetheless. The Economist’s Big Mac Index is based on the theory of purchasing-power parity (PPP). Exchange rates should equalize the price of a basket of goods in different countries.

The index shows which countries’ currencies are under and overvalued. The most overvalued currency according to the index is the Norwegian Kroner, which is almost 100% above its PPP rate. The most undervalued currency according to the index is the Chinese Yuan, unvervalued by almost 50%.

We thought it would be interesting to take track the performace on the Big Mac Index by through currency ETFs (see here). Unfortunately, there are not ETFs for all of the currencies on this list, but we chose the following:

LONG undervalued BIG MAC currencies:

CNY: Market Vectors Chinese Renminbi USD ETNs

XRU: Currency Shares Russian Ruble Trust

SZR: WisdomTree Dreyfus South African Rand Fund

FXM: Rydex Mexican Peso Trust

SHORT overvalued BIG MAC currencies:

FXF: Rydex Swiss Franc Trust

EUO: ProShares UltraShort Euro (long this index)

FXA: Rydex Australian Dollar Trust