Currency Hedge Funds Euro
Euro Bets Hurt Currency Hedge Funds in June 2012Currency hedge funds took it on the chin in June as the trouble in the Euro Zone brought down many currency-focused funds betting on the euro. According to the Parker Global Strategies Currency Managers Index, currency hedge funds lost 1.14% in June but have recovered somewhat thus far in July.
The sharp turnaround in the euro frustrated currency investors who were positioned for a weakening trend to continue. It also made it difficult for traders to bet on a sustained rebound, based on the Parker Global Strategies Currency Managers Index, which tracks the performance of funds in which it invests.
Funds with currency-driven investment strategies lost 1.14% in June from the previous month, bringing total losses for the first half of the year to 0.35%, the index showed. The benchmark has declined three out of the past six months, and is down 2.66% from a year ago.
"You can print out a euro chart for the month of June and frame it, and call it: nightmare for trend followers," said Jon Stein, managing director at Parker Global.
Since global market turmoil increased in 2008, currency fund managers have at times simply shifted bets back and forth between higher-yielding currencies with better growth prospects, such as the Australian dollar and South African rand, and safe havens like the U.S. dollar and Japanese yen. Since it was started in 2001, the Park Global Currency Managers Index posted annual gains of as much as 17.45% in 2003, but returns have been more disappointing in the past four years as currency investing has become increasingly challenging, with the index losing 6.17% in 2011. Source