The currency exchange market is yet another area that has been opened to a wider span of investors through the emergence of exchange-traded funds (ETFs) as an increasingly popular investment instrument. Currency ETFs that trade like regular U.S. stocks have simplified access to investments in foreign exchange.

Currency ETFs reflect the changes in exchange rates between a pair of currencies, or the overall performance of a single currency against a selected basket of other currencies. Currency funds may hold cash in a currency, or use futures, options, forex or swap contracts to track exchange rates and relative values. Investors utilize currency ETFs to add further diversification to an investment portfolio, or just as a simple means of accessing potential profits in the forex market.

The Japanese yen is the fourth most widely traded currency globally, behind the U.S. dollar, the euro, and the British pound, and it is the most widely traded currency in Asia. It is often used as a reserve currency in international transactions. With forex traders, the yen is sometimes used to provide diversification, as it frequently trades inversely to the other major currencies in relation to the U.S. dollar.

CurrencyShares Japanese Yen Trust ETF

The CurrencyShares Japanese Yen Trust ETF (NYSEArca: FXY) was first launched in 2007 by RydexSGI, and it is rated as relatively high-risk. The trust seeks for its shares to mirror the price and performance of the Japanese yen relative to the U.S. dollar. They are intended to provide investment results corresponding to those possible from holding currency in the form of yen.

FXY is the second most widely traded yen ETF. Its with total assets are over $100 million, and its average daily trading volume is over 100,000 shares. The fund's expense ratio is 0.4%. This fund is well-suited to investors who seek exposure to the Japanese yen, specifically in relation to the U.S. dollar.

ProShares Ultra Yen ETF

The ProShares Ultra Yen ETF (NYSEArca: YCL) is the first of two ProShares offerings of leveraged ETFs that track the performance of the Japanese yen. By holding yen/U.S. dollar forward contracts, the fund’s goal is to provide investment results equal to twice the daily performance of the JPY/USD cross rate.

The fund's expense ratio is 0.95%. Its total assets are approximately $5 million, and its average daily trading volume is only about 2,000 shares.

YCL is appropriate for investors who desire leveraged exposure to the performance of the Japanese yen relative to the U.S. dollar, and who anticipate a relative rise in the value of the yen. ProShares offers a similar leveraged ETF that adopts a bearish stance toward the yen.

ProShares UltraShort Yen ETF

The largest yen ETF, as of 2015, with over $400 million in total assets, is the ProShares UltraShort Yen ETF (NYSEArca: YCS). This is another leveraged ETF that ProShares offers to reflect changes in the JPY/USD exchange rate. This fund has a bearish approach to the yen, seeking to provide daily investment results that are 200% of the inverse of the performance of the JPY/USD pair. While YCL shares increase in value when the relative value of the yen rises, YCS shares increase in value when the yen declines relative to the U.S. dollar.

YCS is the only yen-focused ETF that is currently showing a positive five-year return. The fund shares have increased in value 71% between 2010 and 2015, due to a protracted bear market for the yen.

The fund's expense ratio is 0.95%. For investors with a bearish outlook on the JPY/USD pair, and who are seeking leveraged investment results, the ProShares UltraShort Yen ETF is the best option currently available.