Learning to trade in the Forex currency market can be a daunting task for investors wanting to diversify their stock portfolio to hedge against the weak US dollar. The Forex exchange may appear a bit too “foreign” to stock investors who are only familiar with trading on the stock markets. There is a better option in which an investor will not have to open a Forex broker account or change trading platforms just to add currencies to their investment basket.

Thanks to Rydex Investments, investors can now trade and own currencies using Rydex’s currencySHARESSM Trusts. They currently have 8 different currencies corresponding to 8 different currencySHARES^SM Trusts. An investor has the opportunity to trade the currencies of the Australian Dollar (FXA), British Pound Sterling (FXB), Canadian Dollar (FXC), Euro (FXE), Japanese Yen (FXY), Mexican Peso (FXM), Swedish Krona (FXS) or Swiss Franc (FXF).

The shares of these currency trusts are ETFs that can be bought and sold on the NYSE Arca like other exchange listed securities and can also be bought with a margin account. CurrencySHARES^SM Trusts may be a simple and cost effective way for investors to gain similar investment benefits of holding the actual foreign currency.

Before you decide to add some currency ETFs to your investment portfolio, there are a couple of thing you should be aware of. While the actual Forex currency market is very liquid, the currency ETFs are not at the moment. It may be because it is still a fairly new product. The average daily volume on most of the currency shares has a hard time breaking 100K shares, except for the Euro and Yen which averages over 200K and 300K respectively. The second thing to be aware of is the IRS tax treatment of currency ETFs.

Currently, the CurrencySHARES^SM Trusts holds the underlying currency in a bank where it earns interests which are paid out as dividends and taxed as “ordinary income”. Because the IRS does not consider holding currencies an “investment”, there is not a long term capital gains tax benefit. When selling the shares for a gain, it will also be treated as ordinary income no matter how long it was held. This can be tax rate of up to a 35% on both the dividends and capital gains.

Consult your tax advisor or accountant to be current on any new tax issues. For more information on the CurrencySHARES^SM Trusts, you can visit Rydex Investments at www.currencyshares.com.

Contact Info:

Rydex Customer Service Department
Monday - Friday, 8:30 a.m. to 5:30 p.m. ET

Phone: 800.820.0888 or 301.296.5100
Fax: 301.296.5101

Mailing Address
Rydex Investments
9601 Blackwell Road
Suite 500
Rockville, Maryland 20850