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Pros and Cons of Currency ETFs Versus Holding Foreign Currency?

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If you want to diversify an account to hold multiple currencies, what are the pros and cons of using currency ETFs versus holding the native currencies?  For Australia, an example would be the ETF FXA.  For Canada, the ETF would be FXC.


It looks like these ETFs have expenses around 1/2 of 1%.


One confusion for me is around what kind of short-term interest rates would you expect to be paid on cash balances held in a broker account as Australian and Canadian currency.  FXA and FXC pay very little, which makes me wonder if FXA and FXC are secretly making something on money market cash balances and not paying those out to the ETF holders.


Do any of you have opinions on which world currencies are good for diversification in a conservative portfolio?  Obviously you want a currency for a country in which there is some real economic growth (nominal growth minus inflation), and you want a country that does not print currency in an inflationary way.

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