Roundtable: Making forex go further
Few industries can claim to have seen as much growth as hedge funds can. The development of the hedge fund industry has led to a greater reliance on prime brokerage capabilities, and in the FX world, this is no different. Alternatives brings together people from both sides of the business to look at developments in FX, and to ask what impact FX has on hedge funds.
This article appears courtesy of Global Investor.
Maha Khan Phillips, Alternatives: What are the different ways in which FX influences hedge funds?
Pierre Lequeux, ABN Amro Asset Management: Well I think that there are many different ways in which FX influences hedge funds aside the obvious source of alpha aspect. It may materialise through the credit exposure of the fund, the access to leverage or the diversification it may bring to the portfolio.
It may also affect the marketability of the product itself. It's quite clear that if you are going to invest into a currency fund denominated in the dollar, it could be a less attractive proposition if you are a European investor or a US investor depending on the currency scenario.
Cameron Crise, Gartmore: The further to the right you are on the risk spectrum, the more closely different asset classes align. If you're at the really spivvy end, say, the emerging market, when the currency goes down, the equities and fixed income goes down.It's really the same investment decision. If you're an emerging market equity manager, and you don't keep abreast of what's going on with currency side, then you're going to get the occasional nasty surprise.But