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The One Currency Fund That We Recommend

Bronze-rated Eaton Vance Diversified Currency tilts toward emerging markets, is diversified, and has relatively low fees.

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Patricia Oey: Currency funds are difficult to use for the average investor, and many investors get currency exposure by holding international equity funds.

There is only one currency fund Morningstar recommends--Eaton Vance Diversified Currency, which carries a Morningstar Analyst Rating of Bronze. This fund invests in currencies from around the world, but tends to tilt toward the emerging markets. The U.S. dollar is used to purchase foreign currencies, so it is effectively short the U.S. dollar. That means the fund will struggle to perform in a rising dollar environment, which was the case over the last few years. But in 2017, the U.S. dollar has weakened slightly, and many of the fund’s emerging-markets holdings have appreciated against the U.S. dollar, which has resulted in improved performance of the fund.

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

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