How to invest in EUR?

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duricka
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Joined: Sat Oct 28, 2017 9:18 am

How to invest in EUR?

Post by duricka » Tue Jun 30, 2020 8:19 am

I am leaving US later this year, but I still don't have an account in Europe. I would like to protect my money (usd) from devaluation. Any ETF that could help me with that? I don't need liquidity for at least 2 years (up to 4 years).

neilpilot
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Re: How to invest in EUR?

Post by neilpilot » Tue Jun 30, 2020 8:24 am

I've considered using FXE

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tre3sori
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Re: How to invest in EUR?

Post by tre3sori » Tue Jun 30, 2020 8:31 am

Maybe this:
iShares $ TIPS 0-5 UCITS ETF ticker:SXRH ISIN:IE00BDQYWQ65

By the way: Your title is misleading. It suggests that you want to invest your money in EUR which stands for the currency, not for the region.


ok. didn't get your intention right. sorry.
Last edited by tre3sori on Tue Jun 30, 2020 10:53 am, edited 1 time in total.
Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep by him in reserve. Talmud | 34% Real Estate, 40% VGWL, 17% VAGE, 6% 8PSG, 3% Cash

Topic Author
duricka
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Re: How to invest in EUR?

Post by duricka » Tue Jun 30, 2020 8:46 am

Yes, I would like to invest in a way that if a currency gets much stronger than usd, I don't lose that money.

neilpilot
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Location: Memphis area

Re: How to invest in EUR?

Post by neilpilot » Tue Jun 30, 2020 9:20 am

FXE, which I mentioned above, is a pure currency play. I'm looking for a way to invest (primarily in bonds) in EUR denomination, and have so far not identified a suitable ETF or MF.

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Topic Author
duricka
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Re: How to invest in EUR?

Post by duricka » Tue Jun 30, 2020 9:24 am

neilpilot, yes thank you for the proposal. I heard hedged funds got smashed ten years ago, although I don't know enough to know why.

neilpilot
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Re: How to invest in EUR?

Post by neilpilot » Tue Jun 30, 2020 9:26 am

duricka wrote:
Tue Jun 30, 2020 9:24 am
neilpilot, yes thank you for the proposal. I heard hedged funds got smashed ten years ago, although I don't know enough to know why.
Hedge funds? You do not want to choose a fund that invests in EUR assets but hedges currency; that will negate your desire to incorporate USD-to-EUR fluctuations into your investment.

PolarInvest
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Re: How to invest in EUR?

Post by PolarInvest » Tue Jun 30, 2020 9:36 am

You can use FXE, though I don't really like the expense ratio of 0.4%.

If you have $100,000 to put in a taxable account, you can use Interactive Brokers to hold Euros and purchase them at the true market rate for minimal commissions. I'm not sure if IBKR Lite would allow this, but maybe.

JackoC
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Re: How to invest in EUR?

Post by JackoC » Tue Jun 30, 2020 11:22 am

PolarInvest wrote:
Tue Jun 30, 2020 9:36 am
You can use FXE, though I don't really like the expense ratio of 0.4%.

If you have $100,000 to put in a taxable account, you can use Interactive Brokers to hold Euros and purchase them at the true market rate for minimal commissions. I'm not sure if IBKR Lite would allow this, but maybe.
I agree that's probably the most efficient way right now. The other alternative is to go long EUR currency futures (EUR 125k per contract). That sometimes works better if the interest rate differential implied in the forward FX market is favorable relative to getting 0% on the EUR held at IBKR v the best you could get on USD in a high yield savings account with the bulk of the money (minus what you'd have to keep in the futures account for margin plus some cushion) you'd still have available to invest in USD if you didn't actually buy the EUR outright bur rather synthesized the exposure via futures.

But right now the rate differential implied in the FX futures contracts looks at a glance to be something like ~0.9% (USD implied interest rate in the FX fwd market higher than EUR implied interest rate by that much); best USD bank HYSA rate is 1.36% but that's liable to drop soon IMO. The best 11 m no penalty CD rates are around 1%. And there's some cost and labor input to roll over the futures. I think your suggestion would be the most efficient right now, also considering it's simpler.

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