507A7B86-7507-41CB-8F0A-9AD191E32DA5 513D0B9D-7474-4D61-863F-70F1B3696FB7 60F0322F-B5F4-4A4F-B505-A8773B90F3B9 Comments A5B32EC7-3D41-482F-8D63-40B8CC4B0807 86DDA3D7-F193-4FF9-BE89-5AF7F4C92A8F 1FAE3C2F-8600-47BE-8D04-C46DC4FFD6B0 47ACF625-4F24-4613-9C4E-5E81CABE1FBA FB57FEB0-874D-4585-BF2D-FAAE8EBC17F6 AD97905C-02C9-4A07-9EEA-DA1F36CC7FA8 8727CDE7-CFD1-40EA-A8AF-256882E677CA B052573C-CEE4-4CD1-B86F-C9CB0202622C 1FDA88B9-6396-4BE0-B01D-4DC4FA38A632 6CD0F19E-3C61-44FC-9723-C7737416CD7C 62D3F811-1C6C-477C-972B-FE52539070FC•• 1FAE3C2F-8600-47BE-8D04-C46DC4FFD6B0 47ACF625-4F24-4613-9C4E-5E81CABE1FBA FB57FEB0-874D-4585-BF2D-FAAE8EBC17F6 EF459BAF-1347-4C71-9008-BDB3136FCCE8 3BB10396-3999-4821-82D8-3568DE598D06 F3D95CB7-5CF3-4B27-8B55-AA78EDF89759 63057605-E453-4FDE-89BC-ABD2BC6600E2 Views 6CD0F19E-3C61-44FC-9723-C7737416CD7C

Cookie settings

When you visit any website, it may store or retrieve information on your browser, mostly in the form of cookies. This information might be about you, your preferences or your device and is mostly used to make the site work as you expect it to. The information does not usually directly identify you, but it can give you a more personalized web experience. Because we respect your right to privacy, you can choose not to allow some types of cookies. Click on the different category headings to find out more and change our default settings. However, blocking some types of cookies may impact your experience of the site and the services we are able to offer. Cookie policy

    image image

    Why look at currency alpha strategies now?

    Why look at currency alpha strategies now?

    19 August 2020 Solutions
    The choices facing investors are increasingly complex.

    Low interest rates and quantitative easing programmes have caused a significant proportion of global government bond markets to trade with negative yields. Other risk assets have been supported by monetary and fiscal easing, and the uncertain outlook makes it difficult to assess valuations. We believe that there are a number of features that make currency alpha strategies an attractive asset class given this backdrop.

    In this paper we outline the advantages of active currency strategies:

    • Currencies are a true relative value asset class
    • Active currency strategies can be a source of pure alpha
    • Currency strategies can be highly capital efficient
    • Deep liquidity means strategies can be quickly adapted

    We then provide three reasons why we believe currency volatility is unlikely to return to the lows of 2019, potentially benefiting returns:

    • The economic fallout from the current crisis is likely to be severe and long lasting
    • Central banks are unlikely to be able to successfully contain market volatility
    • The notable rise in trade frictions and uncertainty we have witnessed in the past few years is likely to mean we have seen the peak in globalization

    Finally, we outline our approach to currency alpha, which is very different to the type of currency management often implemented under the umbrella of a global fixed income portfolio.

    image
    Download PDF
    513 kb
    Back to top