ETF NEWS: PLAYING BOTH SIDES OF THE COIN

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By seadmin

Want to play both sides of the coin? More specifically, do you want to play both sides of the U.S. dollar? Well, now you can do so, thanks to two new exchange-traded funds (ETFs) that were launched Tuesday. The funds allow investors to make money from the movement of the U.S. dollar — relative to a basket of foreign currencies.

The thing that I like about these new funds is that one of them is designed for dollar bulls and the other one caters to dollar bears.

The two new dollar ETFs are the PowerShares DB U.S. Dollar Bullish Fund (UUP) and the PowerShares DB U.S. Dollar Bearish Fund (UDN). Both funds already are trading on the American Stock Exchange.

"Investors are getting more data on the U.S. dollar, what’s driving it and the impact on their investment portfolios, but there haven’t been a lot of tools to invest in the dollar’s moves," said Kevin Rich, chief executive at DB Commodity Services LLC, the ETFs’ managing owner, during a media call Tuesday.

Thanks to the innovative folks at Deutsche Bank, greenback chasers now can play the dollar’s moves with all of the benefits of ETFs but without the hassles inherent in trading futures contracts.

The funds, in essence, work as follows. The "dollar bullish" (UUP) will make money when the dollar rises against global currencies, while the "bearish" fund (UDN) will profit when the U.S. dollar falls.

I am a big believer in the greenback’s potential for volatility, but until now I haven’t been able to recommend an ETF to my advisory service subscribers that directly takes advantage of the dollar’s propensity for profitable fluctuations.

Thank you, Deutsche Bank and PowerShares, for making it possible for those of us who can read the dollar’s next move to play both sides of the proverbial coin.

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