PT  - JOURNAL ARTICLE
AU  - Richard Harper
TI  - The Increasing Reach of Currency Exchange-Traded Products
DP  - 2009 Sep 21
TA  - ETFs and Indexing
PG  - 189--200
VI  - 2009
IP  - 1
4099  - http://guides.pm-research.com/content/2009/1/189.short
4100  - http://guides.pm-research.com/content/2009/1/189.full
AB  - Investing in non-U.S. money-market rates and currencies has long been the domain of global commercial banks, central banks, and institutional investors. Retail and smaller institutional investors have been constrained in their ability to access what is the world’s most liquid market. During their short history, currency exchange-traded products have offered a cost-effective and liquid means of securing exposure to non-U.S. currencies and money-market rates. These exposures enable U.S. investors to diversify their asset base away from the U.S. dollar with risk and return profiles that are distinct from global equity and bonds. “Equitizing” emerging-market exposure and institutional strategies, such as the carry trade, also yields the potential for excess returns, providing a greater scope for more strategic portfolio allocations. In delivering these exposures, sponsors of exchange-traded products have developed a wide variety of structures and investment approaches, each with their own distinct characteristics and potential benefits. Understanding these distinctions is essential for investors to effectively harness the potential of this new asset class.