ETF’s for the Falling Dollar

Playing the Falling Dollar

International stocks tend to do well when the U.S. market doesn’t. This is especially true when that nation’s economy is vibrant and not as dependent on the U.S. economy.

The best way to play the international market and diversify at the same time is to buy ETF’s or Mutual Funds. Below are my top picks. Note there is an affinity for South American stocks. South America’s economies are doing very well. They have less dependence on the U.S. market save for Mexico.

Head South

The first pick is iShares MSCI Brazil ETF (EWZ). This Brazillian ETF is up 73% YTD. Brazil already has a vibrant economy and this will be a boon to an already rocking economy. The economy is practically energy independent with its native ethanol production. In addition a recent oil discovery could propel Brazil into the Top 10 oil producing ranks.

Another fund to consider if you don’t like being tied to one country is the iShares S&P Latin American 40 (ILF). This ETF is up 46% YTD . The Index consists of highly liquid securities of companies from Mexico, Brazil, Argentina and Chile. Notably absent is the sometimes politically volatile Venezuela. That should help you sleep better at night.

Lastly Vanguard Emerging Markets (VWO) is a good way to invest in the broader emerging markets without picking favorites. Up 37% YTD, the fund should see continued gains.

Bet against the Dollar directly

The PowerShares DB US Dollar Index Bearish Fund (UDN) is up 13% YTD. The fund invests in short positions against the U.S. Dollar.