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FUND MANAGERS ARE beginning to take advantage of increased investor interest in currencies by capitalizing on their currency overlay teams to offer higher risk/return currency investments in the form of hedge funds. But some investors are sceptical about what these currency hedge funds have to offer other than an increase in fees.
Gartmore, Barclays Global Investors and GAM have all recently launched currency hedge funds. State Street Global Advisors is planning to do so in the second quarter of this year. Although several other currency managers, such as JPMorgan Fleming, Rhicon Currency Management and Bridgewater Associates, have offered such alpha-generating, absolute-return funds to investors for many years, the asset class is attracting renewed interest from investors and currency overlay managers.
As a result, the number of currency funds generally has been rising. The number of funds in The Barclay Group's Currency Traders Index has peaked this year at 72. This compares with 55 in 2003, 49 in 2002 and 47 in 2001. Sol Waksman, president of The Barclay Group, says: "The number of currency-only programmes included in our index has blossomed due to money flowing into the entire managed futures sector.