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Investing Specialists

Are You Betting Against the Buck?

Most Morningstar.com readers delegate foreign-currency decision-making to professional investors.

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Are you nervous about the direction of the dollar, either over the short or long term? Have you taken steps to diversify your portfolio's currency exposure away from the greenback?

If so, you're far from alone. Investors have sent $33 billion of new assets to world-bond funds over the past year, an amount that represents 20% of the total assets in the group, according to Morningstar's fund-flow data. Foreign currency funds--mainly available in the exchange-traded fund sector--have also garnered investor interest. Designed to deliver a cash return plus whatever amount a given foreign currency appreciates or depreciates versus the dollar, currency ETFs have gained $1.6 billion in new assets for the year to date, with particularly robust flows into funds such as  CurrencyShares Swiss Franc (FXF).

Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.