Merk Investments plans to enter FX ETF market
Merk Investment plans to follow in Pimco’s footsteps and market its flagship FX fund in an exchange-traded fund (ETF) wrapper, according to a regulatory filing.
The company plans to offer an ETF version of the Merk Hard Currency Fund, which seeks to profit from a rise in hard currencies against the dollar. The Merk Hard Currency Fund has assets of $556.5 million under management and the mutual fund has been managed since its inception by Axel Merk.
He will also manage the ETF version of the fund, which will trade on the New York Stock Exchange’s electronic trading platform Arca, under the symbol HRD.
Under normal conditions, the fund invests at least 80% of the value of its net assets in “hard currency”-denominated investments.
Hard currencies are defined by the company as those countries Merk considers to be pursuing sound monetary policy, which fosters an environment of long-term price stability.
Merk considers gold to be the only currency with intrinsic value and, as such, qualifies as a hard currency.
Merk was unable to answer EuromoneyFXNews’ questions due to regulatory restrictions, but he has been a long-term critic of the Federal Reserve’s monetary stance and has warned over the potential for a dollar crash.
The move from Merk follows the launch of the Pimco Total Return ETF earlier this month, a development many believe might be a game changer for the actively managed ETF market, which has struggled to gain traction.
Pimco’s Total Return Fund is the world’s largest mutual fund, with $245 billion under management, and is managed by Bill Gross. The ETF version will also be managed by Gross, with the company betting that his star power will encourage investment in the vehicle.
It would appear that, albeit on a smaller scale, Merk Investments could be set to ride the wave that Pimco might generate.
Since its inception in 2005, the Merk Hard Currency Fund has generated annualised returns of 5.31%, with 2007 and 2009 the best performing years returning 15% and 14% respectively. 2008 was the worst performing year yielding -4.9%. Year to date, the fund has generated returns of 2.8%.