Tags: hedge | funds | dollar | volatility

Currency Hedge Funds Take it on Chin Amid Dollar Volatility

By    |   Tuesday, 11 June 2013 07:44 AM

Some investors make their biggest money in times of market volatility, but that wasn't the case for currency hedge funds last month.

They suffered from the dollar's moves up and down, The Wall Street Journal reports.

The Parker Global Currency Managers Index, which tracks the returns of 17 funds in which Parker Global Strategies invests, dipped 0.58 percent last month, according to preliminary data from the company.

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That compares with a 2.1 percent gain for the Standard & Poor's 500 Index.

The dollar index, which measures the currency against six major counterparts, moved up and down between 81 and 85 in May. That's a trading band of 5 percent from bottom to top.

The volatility has come among uncertainty about when the Federal Reserve will begin tapering its quantitative easing policy.

Trading has been heavy, with Citigroup telling The Journal it completed a record number of trades on June 6.

FX Concepts, the world's largest currency hedge fund, has responded to the volatility by pulling back on many of its positions.

"The last two weeks of trading have been very difficult," Robert Savage, the company's chief strategist, told The Journal.

On Monday, the dollar gained after Standard & Poor's upgraded the U.S. credit outlook to "stable" from "negative."

But experts say that impact may prove short-lived. "The revised rating is positive news for the dollar, but I do not see it being a major catalyst," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C., tells Reuters.

"This is just the latest indication that we are seeing a broad stabilization and improvement in the economy."

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Some investors make their biggest money in times of market volatility, but that wasn't the case for currency hedge funds last month.
hedge,funds,dollar,volatility
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2013-44-11
Tuesday, 11 June 2013 07:44 AM
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