There appears to be broad agreement that the fallout from
the carry trade has led investors to reconsider their approach
to currency investment.
"My experience is that investors traditionally put a lot of
time and effort into their selection of an equity manager and
identifying whether their strengths are in large cap, small
cap, growth, value or whatever," says Arnaud Gérard at
Pareto. "Until recently, much less attention was paid to the
style of managers in the currency world. Investors seemed to be
insensitive to whether their managers’ engine of
return was fundamental or systematic. But there’s
nothing like a change in the cycle to encourage people to look
for the weaknesses of an investment process."
Fundamental to this reassessment has been a renewed and
strengthened focus on the merits of diversification across a
range of strategies. "We are agnostic as to the style of
currency management that investors...