Euro ETF



An exchange-traded fund that invests in the euro currency, either directly or through the holding of euro-denominated short-term debt instruments. Euro ETFs are often set up as currency trusts or grantor trusts, meaning that stakeholders have a specific claim to a set amount of euros per share.


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Watch: Understanding ETF


|||The euro is one of the most liquid currencies in the world, making ETFs an attractive option for investors who wish to gain from the currency’s appreciation without entering the futures or forex markets. Euro ETFs can also be shorted, as a bet that the euro will fall compared to the dollar.

Euro ETFs do not have an underlying index to manage against; instead, they attempt to track as closely as possible the exchange rate between the euro and the U.S. dollar, minus expenses. Some of these funds are not eligible for the long-term capital gains tax rate of 15%, because a raw currency is essentially being held by the ETF shareholder. Most ETFs in this class will pay regular dividends equaling the local (euro-denominated) interest rate that is received on the short-term commercial-paper instruments or government bonds that are held in the fund.