Mark Dampier: Asian currencies have global appeal

The Analyst

Now some of you could argue that I am at least a year too late in looking at a global currency fund, as currency movements have become increasingly important to investment of late. My apologies, but, to be honest, I really hadn't felt there was much on the market worth highlighting. That seems to have changed now with the launch of an offshore Global Managed Currency fund from Schroders.

The fund's aim is to preserve the global purchasing power of your money. It is fully global and will not be constrained by having to invest alongside any index. Portfolio turnover is likely to be low as this is not a super-active trading fund, rather more one for longer term strategic investments.

Now you might suppose that the preservation of global purchasing power is not that important and, in some ways, it rather depends on how much money one has. However, may I suggest any doubters ask the unfortunate people of Iceland how they feel about their decimated currency – I suspect foreign holidays will be off the agenda for quite some time for most of them.

Unlike many other currency funds, the Schroders fund is fully global and casts its net wider than simply the major world currencies such as the US dollar, Swiss franc, Euro, Yen and sterling. Perhaps 25 to 30 years ago such a restricted mandate was perfectly reasonable, as there was very little else you would want to buy, but the emergence of the developing world is changing all that.

The banking crisis – or, more accurately, the Western banking crisis – has meant that currencies of developed world nations look less attractive. The world is turning upside down and no longer will the developed world be able to do exactly what it wants. The economies of nations such as China, India and Russia look stronger on a long-term view and their currencies should benefit as a result. Consequently, the Schroders fund will be putting money into Asian and emerging market currencies where it sees fit.

Don't make the mistake of regarding this as a "cash" fund – it won't necessarily show a consistent return in all conditions. Returns are likely to be lumpy because that is just the nature of currency markets; a currency can stay over- or under-valued for a long time, but when it moves it tends to happen suddenly. Investors can make – or lose – a lot of money depending on which side of the move they're on, which is why it is important to invest with people who know what they're doing.

The Schroders team was set up by Geoff Blanning, who is head of emerging markets. He and the fund manager, Clive Dennis, used to work together in commodities and have years of experience in analysing political and economic factors that affect currency.

Right now, there is very little differential in terms of interest rates among the developed nations, and the drivers of currency movements are varying all the time. The Schroders team are constantly on the lookout for signals that might change the value of a currency.

When volatility is low (like now) they tend to invest neutrally and the portfolio will be fairly close to the benchmark. However, when volatility increases and opportunities become more prevalent, they can move decisively into the areas they believe have the most promise.

The UK's economic woes and the massive borrowing plans of our Government have made sterling look vulnerable. The only saving grace is that we're not alone – most of the world's major currencies look ugly right now. However, given the almighty mess that the UK finds itself in, it is not hard to see sterling suffering further falls over the next couple years. This new Schroders fund should appeal to those looking to enhance the purchasing power of their capital on a global scale.

Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent