The vitality of currency ETFs was long questioned, as only a few were operating with enough assets to cover expenses. However, investors recently have picked up the pace, investing nearly as much in October as the first nine months of 2009 combined.

$548 million was added to currency ETFs in October, pushing the year to date total to $1.2 billion, according to The Street. The incredible gain in invested assets suggests that currencies may soon be a mainstay in the average portfolio, helping to erase currency fluctuations that threaten portfolios that are limited in their geographic diversification.

A shift in investor sentiment towards cash as an asset class, rather than a basic unit, has led investors to seek out foreign diversification against currency risk. Rydex CurrencyShares Australian Dollar Trust (FXA: Quote, Profile, Advanced Chart, News), Rydex CurrencyShares Japanese Yen Trust (FXY: Quote, Profile, Advanced Chart, News), Rydex CurrencyShares Euro Trust (FXE: Quote, Profile, Advanced Chart, News), and Rydex CurrencyShares Canadian Dollar Trust (FXC: Quote, Profile, Advanced Chart, News) provide investors a liquid hedge against foreign currency fluctuations, while the PowerShares US Dollar Index Bearish Fund (UDN: Quote, Profile, Advanced Chart, News) and PowerShares DB US Dollar Index Bullish Fund (UUP: Quote, Profile, Advanced Chart, News) allow opportunities to buy and sell the dollar.

Now that risk-aversion is horribly unprofitable, investors are finding themselves capable of handling riskier investments. Currencies are back in vogue as investors look for ways to profit on the changing foreign-exchange marketplace.

The Federal Reserve has indicated that it may expand its $1.75 trillion quantitative easing program to add additional liquidity to the financial markets. MSNBC reports that the Fed’s plans sent both the Euro and Pound higher against the dollar, with the Euro now poised at the highest level since January and the Pound now resting at a six-month high.

News from Russia also indicated a loss of confidence in the Dollar as it continues to expand its vast foreign holdings in Euros and is quietly removing itself from Dollar-denominated assets. The Euro is emerging as the reserve currency of choice, backed up by a quiet and largely inactive central bank, as well as a union of more than 30 European economies. Investors confident in the Euro play are buying into the CurrencyShares Euro Trust (FXE: Quote, Profile, Advanced Chart, News), which currently holds a net asset value of nearly $590 million.

An active central bank in the United States is keeping interest rates so low that traders are now re-entering carry trade positions to profit from the difference in bid and ask interest rates at foreign banks. As rates continue to fall in the United States, carry trade investments in other foreign currencies will only grow more popular and profitable.

Bloomberg reports that between March 20 and April 10, investors could have snapped up an eight percent gain by investing Dollars, Euros and Yen in foreign currencies such as the Brazilian Real, Hungarian Forint, Indonesian Rupiah, South African Rand , New Zealand and Australian Dollars. The recent gain is the best three week growth recorded since 1999.

The carry trade has decreased prices for leading currencies as they are often sold to buy higher yielding currencies in foreign banks. The PowerShares Double US Dollar Index Bullish ETF (UUP: Quote, Profile, Advanced Chart, News) consolidated through March to fall to $25.40 on higher short interest on the US dollar.

The very first options on actively-managed ETFs were released today, as WisdomTree and the NASDAQ OMX Group have reached an agreement to allow WisdomTree’s actively managed currency funds to start listing options on the exchange. WisdomTree’s funds will be the first actively managed funds to give investors access to options, opening the door for option traders to access actively managed ETFs.

According to a press release from The NASDAQ OMX Group, seven of WisdomTree’s funds will be granted options, including:

WisdomTree Dreyfus Brazilian Real Fund (BZF: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus Chinese Yuan Fund (CYB: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus Euro Fund (EU: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus Indian Rupee Fund (ICN: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus Japanese Yen Fund (JYF: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus New Zealand Dollar Fund (BNZ: Quote, Profile, Advanced Chart, News)

WisdomTree Dreyfus South African Rand Fund (SZR: Quote, Profile, Advanced Chart, News)

The exchange-traded funds strive to achieve consistent profits in foreign money markets while giving investors added exposure to changes in the price of foreign currencies against the US dollar.

Option interest in ETFs has soared as investors flock to the funds, which commonly sell options in $1 strike price increments. Stocks and other less liquid listings often price options at $2.50 or $5 intervals, which results in higher premiums and less targeted investing strategies for option traders. The new option contracts will begin trading today, March 17.

Rydex Investments today announced the distribution declarations for seven CurrencyShares exchange traded products: CurrencyShares Australian Dollar Trust (NYSE: FXA), CurrencyShares British Pound Sterling Trust (NYSE: FXB), CurrencyShares Canadian Dollar Trust (NYSE: FXC), CurrencyShares Euro Trust (NYSE: FXE), CurrencyShares Mexican Peso Trust (NYSE: FXM), CurrencyShares Russian Ruble Trust (NYSE: XRU), and CurrencyShares Swedish Krona Trust (NYSE: FXS).

Below is a list of the seven ETFs with their associated distribution. To view a full version of the press release on www.currencyshares.com, click here.