I wanted to revisit the Currency Harvest ETF (DBV). This is the one that goes long the high yielding G10 currency and short the low yielders.It is long Aussie, Kiwi and GBP and it is short yen Swissi and Swedish kroner.
DBV has pretty much kept up with the S&P 500 which, backtest notwithstanding, is a surprise. The short position in the kroner has been a drag and the fund has benefited mightily from yen weakness, and strength from Aussie and Kiwi.
As you can see on the chart DBV will be vulnerable if the yen shows any strength ever again as it did react to the threat of carry trade unwind in the first quarter.
I think anyone in DBV and heavy in Australia or any of the other high yielding destinations needs to realize they will be threatened by a yen rally. This does not mean you have to sell anything but you do need to realize what you are vulnerable to. Every portfolio is vulnerable to something.
4 comments:
That's a good heads up. I hadn't considered that exposure.
Also, I prefer no video, for what it's worth. Nothing against you, but I prefer to read something and read a sentence or paragraph over again if I didn't quite understand. The video makes that hard to do.
Just offering my 2 cents.
Roger, While I do enjoy your videos, I somewhat concur with 12:45 Anonymous about a preference for a written post; the written post is there "for record" and it takes about 45 minutes or so to download the videos on my 50.2 dial-up. My reason for this post, however, is to continue the thoughts left by Rick C to your previous post. Paraphrasing Rick's comments; with a portfolio that yields 3%, one in retirement would only have to withdraw--I read that as sell--at 1% a year to get the 4% annual withdrawal rate. My thoughts: One might even construct a portfolio that yields 4%, or more, and not have to withdraw/sell anything to achieve the 4% annual withdrawal rate. Also, here is a case where no-load mutual funds could be very useful; i.e., withdrawing without the necessity of selling all of the holdings of the security and with no cost associated with the withdrawal. Like Rick C, and as one approaching retirement, I encourage your presentation of thoughts associated with withdrawal from a portfolio during retirement. Thanks, JCarr
if your goal is income and not growth then a ladder of high grade muni's would easily give an excess of 5% a year. depending on the tax situation and the state you live in this could be as good as 7-8% yield from stocks dividend/sale.
also if you start early u can construct the ladder by buying a long term muni (20+ years) each year, instead of constructing a complete ladder upon retirement.
By retirement (or early during) you could have the equivalent of a high yield one-year CD maturing every year that you could then roll over into another 20+ muni or pay for an unexpected large expense.
"I wanted to revisit the Currency Harvest ETF (DBV). This is the one that goes long the high yielding G10 currency and short the low yielders.
It is long Aussie, Kiwi and GBP and it is short yen Swissi and Swedish kroner."
Good topic for discussion IMO.
I've been going back and forth for awhile now on whether to add DBV as a core long-term strategic position. The historical numbers (returns, volatility, Beta, etc.) all look really good, but I just can't quite come to the conclusion that I fully understand it and the risks. I posted this over on Motley Fool and didn't get much of a detailed response:
http://boards.fool.com/Message.asp?mid=25583255&sort=whole&vstest=search_042607_linkdefault
Any further thoughts/info on DBV?
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