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Alternative Market Briefing

Schroders launches absolute return currency funds

Tuesday, February 15, 2011

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Clive Dennis
By Beverly Chandler, Opalesque London

Schroders has launched two Ucits III absolute return currency funds, one in dollars and the other in Euros. The Schroder ISF Absolute Return Currency EUR and Schroder ISF Absolute Return Currency USD funds are managed by Schroders' head of currencies Clive Dennis, and Hardeep Dogra. The funds use no leverage and aim for returns of cash plus with relatively low risk. "The objective is to beat cash Libid or Euribid by 3% net of fees through currency selection" Dennis said.

Schroders' existing benchmarked currency fund has a pool of some 34 currencies on which it can draw and this fund will have a similar exposure. In an interview with Opalesque, Dennis said: "This will suit many types of investors. It's potentially in the retail space but there is no reason why it won't suit anyone, from private investors to institutional investors, who is looking for currency diversification without the credit and duration risk of many international bond portfolios."

The funds gain their currency exposure through forwards and options and own no underlying assets for investment return purposes. The currency team can go long and short in their holdings. "We think that the cycle is against fixed income at the moment and that will continue" said Dennis. "Inflation is picking up and central banks will hike rates so we think exposure to a broad range of currencies still makes sense." Fees on th......................

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