The pursuit of diversification

Thu Jun 24, 2010

Why combining various strategies can make sense

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...

ISSN: 2151-1845 / CDC10004H

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