Schroders has launched its first managed currency fund, designed to protect and increase global purchasing power over the long term.
The Schroder ISF Global Managed Currency fund is an actively managed, multi-currency money market vehicle.
It will invest in a diversified basket of currencies, and can, Schroders says, offer better returns than government bonds and standard money market returns.
The fund aims to outperform the Global Currency Index by targeting an excess return of 3% pa and has the flexibility to invest in any currency around the world. Its focus will include opportunities generated by emerging market currencies.
Clive Dennis will manage the fund with help from Schroders' commodity, bond and equity fund managers, analysts and economists.
Dennis says most currency vehicles invest in a narrow band of currencies.
"This approach is very limited as historically, a lot of value has been generated by emerging market currencies, and we certainly believe that will be the case in the future as these currencies benefit from higher growth and, in many cases, stronger finances as well."
The fund has the ability to move to where the team sees the best opportunities, says Dennis.
"For example, we are currently overweight in Eastern European currencies such as the Polish Zloty, the Czech Koruna and the Hungarian Forint. There has been a lot of concern about the health of the Eastern European economy and, since it appears that the worst is over, the currencies have attractive yields and are looking cheap," he adds.
Robin Stoakley, head of UK retail, says cash deposits are not an attractive option, and with inflation set to rise, the value of deposit risks could be eroded over time, destroying an individual's purchasing power.
"Schroders wants to offer clients an alternative to cash deposits and government bonds that can deliver a higher yield, the potential for capital gains and, most importantly, help them to preserve their global purchasing power," he says.
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