Schroders has launched two absolute return currency funds – Schroder ISF Absolute Return Currency EUR and Schroder ISF Absolute Return Currency USD. Both are UCITS III compliant with daily liquidity, and aim to offer both institutional and retail investors vehicles that will deliver low-risk cash plus returns from actively managed currency portfolios.
Clive Dennis, Head of Currencies at Schroders, and Hardeep Dogra are the fund managers and will use a broad range of global cash instruments and currencies to generate absolute returns. The Schroders Currency Team will use both long and short exposures and their investment universe includes over 30 different currencies, which offer both high liquidity and diversification opportunities.
The rationale for investing in currencies is compelling from a diversification perspective as they offer a low correlation to other asset classes, such as equities, bonds, commodities and property. Currencies also offer an alternative to cash deposits and government bonds. Many investors currently hold assets in cash deposits, but with interest rates as low as they have ever been, that is not an attractive option. With growing concerns that inflation is expected to rise again in the future, the value of those deposits risks being steadily eroded over time, thus considerably reducing an investor’s return. Schroders believes that both Schroder ISF Absolute Return Currency EUR and Schroder ISF Absolute Return Currency USD, should provide a good opportunity for investors to diversify and achieve cash-plus returns, in what could be a very challenging environment for more typical cash type investments.
Clive Dennis, Head of Currencies at Schroders, says: “We believe there is scope for much higher yields globally as Central Banks are forced to restructure monetary policy, but at varying speeds. Both these funds enable investors to benefit from the consequent currency investment opportunities and maintain the assurance of a low risk and high liquidity proposition. Our approach is unlike typical currency funds that tend to be highly leveraged.”
