Should you count on currency?

An investor who wants exposure to currencies can consider global bond funds, where currency moves have almost as much impact on performance as interest rate movement

Yan Barcelo 14 May, 2019 | 5:00PM

A number of market observers believe that 2019 could be a good year for currencies. However, investing in currencies –usually referred to as ‘carry trade’ - can be a tricky and high-risk proposition for most investors, though it also could offer high returns. For many investors, world bond funds are a more accessible way to invest in currencies; it is less risky though also potentially less profitable.

“An asset class we particularly like is emerging markets currencies,” says Alex Bellefleur, chief economist and strategist at Mackenzie Investments, in Montreal. “The Mexican peso and the Brazilian real are undervalued at this moment and should perform nicely with the U.S. Federal Reserve’s present stance. We also see the Indian rupee and the Turkish lira strengthening in 2019,” he continues.

This optimism is shared by François Bourdon, currency specialist and global chief investment officer at Fiera Capital in Montreal. He goes a step further, saying the currencies “could well be the winning asset of 2019.”

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About Author

Yan Barcelo  is a veteran financial and economic journalist with more than 30 years of experience, writing for many publications in Toronto and in Montreal, including CPA MagazineLes Affaires and Commerce.

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