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; request a free guide on NISAs from Hargreaves Lansdown

New Articles
tvDownton Abbey Christmas special
Arts and Entertainment
Wolf (Nathan McMullen), Ian (Dan Starky), The Doctor (Peter Capaldi), Clara (Jenna Coleman), Santa Claus (Nick Frost) in the Doctor Who Christmas Special (BBC/Photographer: David Venni)
tvOur review of the Doctor Who Christmas Special
News
peopleIt seems you can't silence Katie Hopkins, even on Christmas Day...
News
news
PROMOTED VIDEO
News
i100
Arts and Entertainment
Left to right: Stanley Tucci, Sophie Grabol and Christopher Eccleston in ‘Fortitude’
tvSo Sky Atlantic arrived in Iceland to film their new and supposedly snow-bound series 'Fortitude'...
Arts and Entertainment
Jenna Coleman as Clara Oswald in the Doctor Who Christmas special
tvForget the rumours that Clara Oswald would be quitting the Tardis
Arts and Entertainment
Japanese artist Megumi Igarashi showing a small mascot shaped like a vagina
art
News
The Queen delivers her Christmas message
newsTwitter reacts to Her Majesty's Christmas Message
Arts and Entertainment
tv
Life and Style
fashion
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Selby Jennings: Oil Operations

    Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

    The Jenrick Group: Night Shift Operations Manager

    £43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

    SThree: Trainee Recruitment Consultant - LONDON

    £20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...

    Day In a Page

    A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

    Christmas without hope

    Gaza fears grow that conflict with Israel will soon reignite
    After 150 years, you can finally visit the grisliest museum in the country

    The 'Black Museum'

    After 150 years, you can finally visit Britain's grisliest museum
    No ho-ho-hos with Nick Frost's badass Santa

    No ho-ho-hos with Nick Frost's badass Santa

    Doctor Who Christmas Special TV review
    Chilly Christmas: Swimmers take festive dip for charity

    Chilly Christmas

    Swimmers dive into freezing British waters for charity
    Veterans' hostel 'overwhelmed by kindness' for festive dinner

    Homeless Veterans appeal

    In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
    Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

    'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

    Yazidi girls killing themselves to escape rape and imprisonment
    Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

    Ed Balls interview

    'If I think about the deficit when I'm playing the piano, it all goes wrong'
    He's behind you, dude!

    US stars in UK panto

    From David Hasselhoff to Jerry Hall
    Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

    Grace Dent's Christmas Quiz

    What are you – a festive curmudgeon or top of the tree?
    Nasa planning to build cloud cities in airships above Venus

    Nasa planning to build cloud cities in airships above Venus

    Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
    Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

    Clocks, rifles, swords, frogmen’s uniforms

    Surrounded by high-rise flats is a little house filled with Lebanon’s history
    Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

    Four months after the bombardment, Gaza’s wounds are yet to heal

    Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
    Gastric surgery: Is it really the answer to the UK's obesity epidemic?

    Is gastric surgery really the answer to the UK's obesity epidemic?

    Critics argue that it’s crazy to operate on healthy people just to stop them eating
    Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

    Homeless Veterans appeal: Christmas charity auction

    Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
    Pantomime rings the changes to welcome autistic theatre-goers

    Autism-friendly theatre

    Pantomime leads the pack in quest to welcome all