How the active currency trading market evolved

Thu Jun 24, 2010

From managing currency risk to generating alpha

Thanos Papasavvas, head of the Investec Currency Management team, traces the genesis of today’s active currency management back to the early 1980s and to the community of fixed income managers. "Currencies were more volatile than bonds, and unless you managed them properly they would have a decisive impact on the performance of your portfolio," he says. "From a relatively early stage, bond investors recognised that they had to manage that underlying risk and so it was in the fixed income part of the industry that currency specialisation and currency analysis began to rise to prominence about 30 years ago."

Thanos Papasavvas

Among international equity managers, the penny took longer to drop. Understandably so. When the Nikkei was continuing its remorseless rise towards 30,000, and when investors were busy discovering exciting emerging markets such as Italy or Portugal, a 2% shift in the value of the yen, lire or escudo...

ISSN: 2151-1845 / CDC10004H

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