For investors, betting on the strength of the US dollar versus foreign currencies can be very risky at times, but it has been very lucrative of late. The US dollar is on the upswing—and likely will continue to strengthen for several years. That would be good news for investors in exchange-traded funds (ETFs) that track the dollar’s strength.

Example of the riskiness: The dollar lost about one-third of its value against a basket of major foreign currencies from March 2002 through June 2011 as investors grew wary of soaring US deficits…gained confidence in the euro’s ability to survive…and reacted to economic gains by emerging markets.

But things have changed—now much of the world outside the US ­faces recession, economic stagnation or slowdowns in growth while the US economy is relatively strong. Also, while Europe and Japan are stepping up economic stimulus plans that keep interest rates low, the US Federal Reserve expects to raise short-term rates in 2015. All that is attracting investors around the world to investments denominated in dollars. The US Dollar Index, which tracks the value of the dollar against six major developed-nation currencies, jumped 9% this year through October 31 to the highest level in four years, and the dollar has gained 46% against the Japanese yen since the start of 2012. The following ETFs provide a good way to track the dollar’s strength…

PowerShares DB US Dollar Index Bullish ETF (UUP) tracks the value of the dollar relative to six major world currencies.

WisdomTree Bloomberg US Dollar Bullish ETF (USDU) can bet on the dollar versus the Brazilian real, Chinese yuan and Mexican peso in addition to developed-nation ­currencies.

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