By most indications, the Merk Hard Currency Fund
has had a successful first year. After its launch in May 2005, the flagship fund product of Palo Alto-based money manager Merk Invesments
found its way onto Schwab
platform in August, reached a distribution agreement with Fidelity
in March, and over the past six weeks has seen its assets under management double from $10 million to $20 million.
For company president Axel Merk
, these results signify that ever greater numbers of investors are embracing the idea of hedging against a precarious dollar. "What really has happened over the last couple of weeks is that the broader retail public has taken a very strong interest in looking for ways to diversify in a weakening dollar environment," Merk told the MFWire
. "The dollar has been under much more serious pressure ... the decline has been of a different quality," he added.
Merk established the no-load Hard Currency Fund
with the belief that uncertainty surrounding the dollar will be ongoing. The fund invests directly in a range of hard currency- denominated, short term money market instruments of countries with "sound monetary policy." Through such means it provides exposure to currencies including the euro, Swiss franc, and Australian and Canadian dollars, and also, indirectly, to gold.
Retail customers have responded well to the offering, Merk said, thanks to his firm's marketing and choice of distribution partners. "Because we have been focused with our marketing message, we have been receiving a lot of attention," he said. "We tend to attract the folks who are looking for long-term diversification."
Though the fund is available through dozens of brokerages and has completed a distribution agreement with Vanguard, he acknowledged Schwab and Fidelity as the primary drivers of retail sales.
Overall, however, Merk believes that a fundamental mood shift has enabled the fund to grow so rapidly since March. "Everyone who says, 'We'll wait until there's a more serious uncertainty' ... they seem to be jumping now, scrambling for ways to be protected," he said.
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