Top 6 Best Currency Mutual Funds 2012

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Investing in local (USD) or foreign currencies can be done not only through forex account. Investors can also choose various investment funds such as mutual funds and exchange traded funds to invest in this sector. Some of the best currency mutual funds are: Merk Hard Currency Investor, Franklin Templeton Hard Currency A, PIMCO Emerging Markets Currency A, etc.

Intro

As we know, the currency market is the largest and the most liquid market in the world. If you have always wanted to invest in the Forex, or the currency market, forex account is not the only place for investment. There are various alternatives available through investment funds.

Top 6 Best Currency Mutual Funds 2012Foreign currency mutual funds are appropriate for any investors who wish to venture on a currency and who would like to hedge a currency. If you know about mutual funds, you may be surprise to learn that there are various foreign currency mutual funds. Investors are also taking on the added risk on the currency’s exchange rate by investing in currency mutual funds.

Currency mutual funds objective is to track the value of a currency against another currency, minus the management fees or expense ratio fees. Most currency mutual funds track a currency against the US Dollar (US$ or USD). If you are an American and decide to invest in the emerging markets, you could invest in an emerging markets local currency mutual fund. You may also invest in other currency mutual funds.

Note: Due to many political and economic aspects, currencies can be unpredictable. It can be extremely difficult to predict where the currency may be heading in the long term period.

Top currency mutual funds

The best foreign currency mutual funds are selected based on its long term performance. You will also find other information about the fund review, management, sales load, expense fee, annual holding turnover rate, rating or rank, top holdings, etc.

The top 6 best currency mutual funds of 2012 are:
  1. Merk Hard Currency Investor (MERKX)
  2. Franklin Templeton Hard Currency A (ICPHX)
  3. PIMCO Emerging Markets Currency A (PLMAX)
  4. Lord Abbett Emerging Markets Currency A (LDMAX)
  5. Columbia Absolute Return Currency & Income A (RARAX
  6. ProFunds Falling US Dollar Investor (FDPIX)
1. Merk Hard Currency Investor (MERKX)

The Merk Hard Currency fund objective is to protect against the depreciation of the U.S. dollar relative to other currencies. This mutual fund utilizes most of its assets to purchase ’hard currency’ denominated investments. It generally invests in a basket of hard currency denominated investments composed of high quality, short-term money market instruments of countries tracking sound monetary policy and indirectly in gold.

Merk Hard Currency Fund
As part of no load fund, this Merk fund has total net assets of $574.81 million. It was first incepted on May 2005. Morningstar has not rated this foreign currency mutual fund. The 12-month dividend yield is 1.58%. Axel Merk is the current fund manager. The minimum initial investment for brokerage account in this top performing fund is $2.500. The annual expense ratio fee is 1.30%. The 5-year annualized return of this fund is 6.12%.

Top World Bond Mutual Funds 2012

The top 5 sectors as of February 29, 2012 are New Zealand (16.0%), Norway (13.5%), Japan (8.5%), Gold (8.2%), and Australia (8.1%). The asset allocation is 78.72% in Cash, 11.23% in Bonds, and 10.05% in others. The fund average duration is 0.39 years.

2. Franklin Templeton Hard Currency A (ICPHX)

The investment objective of Franklin Templeton Hard Currency fund is to seek protection against depreciation of the U.S. dollar relative to other currencies. This investment fund typically invests most of its net assets in high-quality, short-term money market instruments and forward currency contracts denominated in foreign hard currencies.

This currency mutual fund has dividend yield of 4.26%. The most recent dividend distribution was done on December 2011 ($0.41%). The annual holdings turnover as of March 15, 2012 is 0.0%. The average annual holdings turnover in the Currency category is 221.6%. It is currently managed by Michael Hasenstab. He started managing this fund in January 2001.

The top 5 currency in its holdings as of December 2011 is Australian Dollar (12.95%), South Korean Won (12.36%), Singapore Dollar (9.91%), Canadian Dollar (8.94%), and U.S. Dollar (7.02%).

3. PIMCO Emerging Markets Currency A (PLMAX)

PIMCO Emerging Markets Currency
The PIMCO Emerging Markets Currency fund invests majority of its assets (>80%) in currencies or in bond denominated in the currencies of emerging market countries. It may, but is not required to, hedge its exposure to non-U.S. currencies. It is considered as a non-diversified mutual fund.

Morningstar analysts have rated this fund with Silver rating. This currency mutual fund has total net assets of $6.02 billion. The YTD return of this fund is 6.82%. The current fund manager of this fund is Michael Gomez. The investors of this best currency mutual fund have received their latest dividend in February 2012 ($0.01). It also has an annual expense ratio of 1.25%. This fund has 3-year annualized return of 10.39%.

The other classes of this fund are PDEVX (Admin Class), PLMCX (Class C), PLMDX (Class D), PLMIX (Institutional Class) and PLMPX (Class P).

As of February 2012, the effective duration of this fund is 0.63 years. The top currency exposure is Mexico (13.02%), Poland (11.81%), Singapore (10.95%), Hong Kong (9.36%) and Turkey (8.97%).

4. Lord Abbett Emerging Markets Currency A (LDMAX)

The investment aim of Lord Abbett Emerging Markets Currency fund is to achieve high total return. This currency mutual fund uses its net assets to purchase the undervalued currencies of emerging markets countries. It also may invest <15% of its total assets in high yield bonds.

This emerging markets currency mutual fund was introduced to investors on September 1988. Leah Traub has started managing this mutual fund since February 2009. It also has an annual holdings turnover of 130.30% as of March 13, 2012. Investor can start investing in this best currency fund with a minimum investment of $1.000 for brokerage account. This fund is available for purchase through 96 brokerages. The management fee of this fund is 0.20% and the maximum sales charge is 2.25%.

Best Emerging Markets Bond Mutual Funds 2012

As of February 2012, the top regional allocation of this fund is Asia Pacific (33.3%), Europe (39.4%), Latin America (22.1%) and Middle East and Africa (7.8%).  The fund has total of 631 issues. The fund has total net assets of $401.49 million.

5. Columbia Absolute Return Currency & Income A (RARAX)

This Columbia Absolute Return Currency & Income fund typically invests >80% of its net assets in short-duration debt obligations and forward foreign currency contracts. Its investment in short-duration debt obligations such as money market fund, and U.S. dollar denominated non-government, corporate & structured debt securities rated investment grade. It may invest in U.S. government bonds. This mutual fund targets portfolio duration <6 months but may spread < 1 year.

Columbia Absolute Ret Ccy Inc
This currency mutual fund has total net assets of $113.82 million. The YTD return of this fund is 1.29%. This CUSIP of this fund is 19763P689. The annual expense ratio of this fund is 1.73%. The fund has 12b1 fee of 0.25%. This best fund has a maximum sales charge of 3.00%. The fund is currently under the management of Nicholas Pifer. Since its inception 5 years ago, the fund always performed in positive return. The best 1-year total returned was in 2007 (6.20%).

This top performing fund has total of 10 holdings as of December 2011. The effective duration is 0.16 years and the effective maturity is 0.21 years. As of December 2011, the asset allocation of this fund is Cash or Cash Equivalent (91.9%), Domestic Bonds (6.4%) and Foreign Bonds (1.7%).

6. ProFunds Falling US Dollar Investor (FDPIX)

This ProFunds Falling US Dollar fund is managed by Jeffrey Ploshnick since December 2009. The minimum initial investment for this fund for either brokerage or retirement account is $15.000. The annual holdings turnover of this fund is quite high (1.298%) compared to the average in the Currency category (221.61%).

There is no management fee for investing in this fund. There are 74 brokerages that provide the sale of this fund. The 3-year annualized return of this fund is 1.43%.

Disclosure: No Position

Fund Performance

NoNameTicker1 Year Return %3 Year Return %5 Year Return %10 Year Return %Expense Ratio
1Merk Hard Currency InvMERKX2.86%8.26%6.12%-1.30%
2Franklin Templeton Hard Currency AICPHX0.74%5.32%4.89%7.46%1.18%
3PIMCO Emerging Markets Currency APLMAX-1.10%10.39%4.57%-1.25%
4Lord Abbett Emerging Markets Currency ALDMAX-1.59%9.51%3.88%5.38%1.02%
5Columbia Absolute Ret Ccy & Inc ARARAX0.40%0.67%1.54%-1.32%
6ProFunds Falling US Dollar InvestorFDPIX-3.01%1.43%0.98%-1.73%
7ProFunds Rising US Dollar InvestorRDPIX-1.27%-5.79%-2.93%-1.62%

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