I've just returned from the World Money Show in Orlando where more than 10,000 investors gathered to learn about global investing. I had a chance to meet with many of the U.S. and foreign financial experts featured at the show, and I will share some of their top investment ideas. To view all of the stocks featured in this special global report, click here.
Money manager and newsletter advisor, Keith Fitz-Gerald focuses on maximizing growth while minimizing risks. And one move he is making to reduce the overall risk to his portfolio is to diversify by currency.
In his The Skeptical Investor, he explains, "China really doesn't want or need any more dollars, so it's looking to other currencies to diversify its mountain of money and lessen risks associated with the U.S. dollar.
"The sheer volume of assets that must be moved creates a large disparity in how currency markets are likely to move this year. It also creates an equally large opportunity for us. So we've going on the offensive with PowerShares-DB G10 Currency Harvest Fund (AMEX:DBV). Even though it's a new fund introduced in October 2006, I feel very comfortable recommending it for a variety of reasons.
"First, it's an ETF, so you can buy and sell it easily. Second, it's run in conjunction with Deutsche Bank, which is a currency-trading powerhouse. They are well known to me in my capacity as a licensed CTA specializing in currencies.
"Third, the strategy DBV uses has produced a 12.5% compounded annual growth rate in testing that dates back to 1994, so the time horizon is long enough to cover a variety of trading scenarios and global events that would derail lesser quality funds under similar conditions.
"I know that 12.5% might not sound like much, but consider that you can double your money every six years at that rate. DBV is designed to protect you against the volatility of month-to-month monetary fluctuations at home and abroad.
"It's also intended to allow you to capitalize on the strongest currencies while isolating your money from the weakest. And, in a twist that's right out of my personal playbook, it's structured in such a way that you can profit from both at the same time! Here's how DBV works.
"First off, holdings are limited to futures contracts on the major ten currencies, including in no particular order, the United States, Australian, New Zealand and Canadian dollars; Japanese yen; Swiss francs; British sterling; Swedish krona; Norwegian krone, and euros.
"Once a quarter, PowerShares buys the top three currencies and sells the bottom three as determined by yield. This means DBV is simultaneously long and short in the currencies market in equally weighted dollar amounts. Over the next 90 days, money flows from the weaker currencies to the stronger ones, just as it always does.
"In the process, the stronger currencies appreciate while the weaker ones actually lose value, so there are profits to be had on both sides of the fence, so to speak. Because some currencies are gaining in value and some are losing, this particular strategy of being simultaneously long and short in different markets also tends to be much more stable than any one currency in isolation.
"This follows the exact train of thought as professional currency traders in that they want to push their money into high-interest-rate earners and keep it from lower yielding products. I know -- I do it every day as a CTA and I live for high potential returns without a lot of risk.
"Buy DBV up to $27. Just to be safe, put a $20 stop loss in place. Over the next six months, I expect at least a 12% return, but given the way I think currency markets are going to behave, 20% is not out of the question, which would be stellar for any portfolio."
Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.
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