The carry trade strategy is common in the currency markets. Traders invest via ETFs in order to purchase currencies with different levels of interest rates. Carry trade is an investing strategy in which an investor borrows money at a low interest rate so as to invest it in another country with higher rates. Investors try to capture the difference between the rates which are caused by different central banks’ actions. If they manage to capture exchange rate differences they are profitable. The carry trade strategy might be highly profitable but it is mainly designed for investors who can take more risk. The carry trades involving riskier assets are profitable if interest rates are low and if there is a huge global demand for risky assets.
G10 ETF is in the long-term down -8% below S&P in 4 years.