Israel's mutual funds have long shifted their main focus from objective advice and money management to marketing. The latest trend, mutuals investing in the euro, proves it.

The first to latch onto the euro was Bank Hapoalim, which managed to raise several hundreds of millions of shekels for its Lahak Euro mutual fund.

Bank Leumi's Pia saw it was selling and came out with Pia Euro, for which aggressive marketing began this week.

The banks' marketing to their customers is very, very effective, mainly among small customers and households. Success did not tarry. Within seven days of intensive pushing, Pia Euro could boast no less than NIS 200 million. Very impressive for a spanking new fund, even if you consider that much of the sum wasn't fresh money but a shift from other Leumi group mutuals.

The success can be attributed to field work by advisers, and Pia's decision to waive management fees, and the load factor ¿ the difference between the buying price and selling price in a mutual fund, for the first three months.

Vive le difference
But ¿ why the euro? And why now? What was Leumi telling its faithful customers?

The Pia Euro brochure distributed to customers states that a new era is beginning in January 2002, in which most of Europe's nations are adopting a new, single currency, the euro. It also states that the change-over will probably have a "range of economic consequences for the global and mainly the European economy".

Sounds nice, it's just inaccurate, not to say misleading. Europe isn't shifting to the euro in January 2002, it did so three years ago, on January 1, 1999. All product prices in the euro bloc are already stated twice, in the local currency and in the euro.

What will happen come January 1, 2002? The euro-bloc nations will simply be replacing their notes and coins with euros and cents. The logistical challenge is a big one. Armored trucks bearing the new money will be swarming through Europe, but the change is entirely a technical one. The change should have zero economic effect, barring a rash of money-laundering here or there, or slight inflation due to prices being rounded out upwards.

It certainly won't have a "range of economic consequences for the global and mainly the European economy", as Bank Leumi claims.

Brother, can you spare a euro?
But the marketing mavens of Leumi's mutuals evidently aren't that fussed about the facts. The euro is news, even on TV. True, most of the articles are about Europe's criminals hoping to take advantage of e-day, but what does that matter? It's a story, something's happening, there is awareness, suddenly travelers have to buy euros instead of marks or francs. There is a product that can be marketed.

Don't buy it? Just ask Leumi Pia, which managed to collect NIS 200 million for its new fund in a matter of days.

That doesn't mean that investing in the euro is a bad deal, of course. When the euro was first born three years ago, we all thought it would be a mighty currency that would give the dollar a run for its money.

Then, the exchange rate was $1.16 per euro. Since then, the euro has eroded to a low of 84 U.S. cents. The September 11 attacks put some color into the euro's pallid cheeks, lifting it to 92 cents. But as American stocks rallied, it slid back down to 88.5 cents.

So. Will the euro rise? Fall? Even the greatest of experts can't reliably predict the behavior of the world's currency markets, which are nothing more than a tremendous casino ruled by massively powerful speculators. It's your call.