FXE, MERKX to hedge against a weaker US$

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Submitted by Diego Mamani on March 15, 2008 - 3:04pm

As a macro econ guy, my approach to personal finance has always been to aggresively invest in low-cost index funds, and practice a pasive "buy and hold" long-term strategy.

With the rapidly depreciating dollar, and the enormous political pressure to increase inflation and dollar devaluation in order to devalue the debts of FBs, the government, and the toxic paper held by banks, we need a way to protect our dollar-demominated assets.

These instruments have been mentioned in other threads: FXE, MERKX, PSAFX, VGPMX. Do you have any experience with them? How do you compare them in terms of cost, fees, volatility? Some of them have as little as $300 million in assets. Is that a problem to you? Do you invest in them through brokerages such as Fidelity or the like?

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I've have a sizable position
Submitted by flu on March 15, 2008 - 3:38pm.

I've have a sizable position in VGPMX and have been pretty happy with it. The fund does pretty sizeable distributions which has cap-gains/dividend implications at the end of the year. But management fees are pretty low.

But you know, this fund is closed to new investors. If you already have shares, you can buy more, but can't add this fund to your vanguard account unless you already have some shares.

Second, this is a precious metal and mining company fund, not a direct investment into metals themselves. So for example ,while gold is at an all time high, this fund was down yesterday because it invests in companies that mine gold and precious metals.

I owe vgpmx directly through vanguard. Provided you have assets above a certain amount, there is no account maintanence fees. Plus I just do a regular contribution twice a month direct from my paycheck into funds in vanguard. I'm pretty much buying every two weeks or so into a basket of 8 funds.

 

Don't own fxe merkx psafx. Though i think with ETF's you might consider using sharebuilder if you don't plan to do one big transaction.

selfportrait

----- Sour grapes for everyone!

Thanks FLU. It's too bad
Submitted by Diego Mamani on March 18, 2008 - 10:27pm.

Thanks FLU. It's too bad VGPMX is closed to new investors. I just put a big chunk into FXE, although I'm fully aware that I'm paying a high price. Still looking at FXA and MERKX... A couple of co-workers put in quite a bit of money into FXE too.

Nice to see the idea of
Submitted by HereWeGo on March 18, 2008 - 10:38pm.

Nice to see the idea of capital flight become accepted by the investor class. That's just super.