Currency-based Exchange Traded Funds

In December 2005, Rockville, MD-based Rydex Investments introduced the first currency Exchange Traded Fund (ETF): Euro Currency Trust (FXE) whose current asset value is about $635. The fund is designed to rise in value when the euro strengthens relative to the dollar, and fall when the euro weakens. So, such currency ETFs are similar to money-market funds but denominated in foreign currencies, which are held by the depository for the trusts, the London branch of J.P. Morgan Chase Bank.

Following up on the success of FXE, Rydex Investments listed six more currency-based ETFs in June on the New York Stock Exchange. These funds are:
Currency Shares Mexican Peso Trust (FXM)
Currency Shares Swedish Krona Trust (FXS)
Currency Shares Australian Dollar Trust (FXA):
Currency Shares British Pound Sterling Trust (FXB)
Currency Shares Canadian Dollar Trust (FXC)
Currency Shares Swiss Franc Trust (FXF)
The first 2 funds hold about 1,000 pesos or kronas. The last 4 funds hold about 100 of their respective currency units.

All these funds have low expense ratios of 0.4% of assets. These ETFs also provide a yield based on overnight interest rates in the country of the currency it holds.