Because the Fund collateralizes its futures positions primarily with US Treasuries, money market funds and TBill ETFs,the results of the total return Deutsche Bank G10 Currency Future Harvest Index Total …
DBV tracks an index with long exposure to developed-market currencies with high interest rates and short exposure to those with low rates using forward contracts. DBV offers a classic and straightforward currency carry trade strategy as reflected in its current basket.
To do so, the fund holds futures contracts on certain G10 currencies using both long and short futures position. DBV goes long currencies with higher interest rates and shorts those with low rates. As with any carry trade, the fund has foreign exchange risk in spades.
By borrowing in cheap currencies and investing in higher-yielding accounts, DBV is capable of delivering non-correlated returns that will generally be positive. Beware, however, that the carry trade has unwound before, and that such a phenomenon can lead to relatively significant losses in a short period of time.