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Currency champs: Alt Ucits outperformer vs. biggest player

How do the sector’s leading lights in FX stack up when it comes to size and returns?

There have been many currency swings in the market due to geopolitical events, with the pound weakening against the US dollar after Brexit and the euro oscillating as various European elections take place.

Managers active in the Alternative Ucits - Currency sector have these currency swings in mind and trade in the forex market to take advantage of these inconsistencies. These funds are designed to complement a portfolio rather than taking up a large proposition of assets.

Over the year period to the end of March, net flows into the sector have been strong and stood at £610 million (€723 million), which is quite a feat considering the sector currently has assets of £1.8 billion (€2.13 billion) in total.

Citywire currently track 13 managers in the Alternative Ucits – Currency sector and in this gallery, Citywire Investment Research showcases the manager holding the largest market share and the top performer in the sector over the past three years

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Andreas König, Pioneer Investments

Andreas König of Pioneer investments has the largest market share in the Alternative Ucits – Currency sector, which currently sits at 33%. He manages the Pioneer Funds Absolute Return Currencies fund, which he has managed since July 2007. He invests in a broad range of currencies from around the world and may also invest in short-term bonds and money market securities.

At the end of the first quarter, he had a net currency exposure of 109.2% to the US dollar, and at the other end of the spectrum, he had a -42.5% positon to the Australian dollar. These reflect his exposures within FX derivatives. Within his major option positions, König had a short on the USD/CNH pair with a call strategy and for the EUR/GBP currency pair he has a long call position.

Over the three year period to the end of March, König returned of 6.19% in euro terms on the Pioneer Funds Abs Return Currencies A No Dis EUR share class of the fund. In comparison, the average manager in the Alternative Ucits – Currency sector returned 0.06% over the same period.

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Sector Performer – Adrian Owens

The top performer in the sector over the past three years on a total return basis is Adrian Owens of GAM. He manages the GAM Star Discretionary FX EUR Acc fund and he has been manager of this fund since its launch in November 2009.

Owens invests in global currency markets using a fundamental, macroeconomic approach to develop themes that capture inefficiencies. Over the first quarter of the year, his long positions in the Mexican peso versus Korea and versus the US dollar made the fund 160bps. His long positon on the Swedish krona was beneficial to his portfolio, adding 220bps.

Over the quarter, Owens significantly reduced his short Canadian dollar position, which went form 70% of NAV down to 18% as it continued to weaken due to falling oil prices. He trimmed his long Swedish krona position by closing out trades versus both Canada and New Zealand.

Owens also trimmed his long Mexican peso risk by closing positions versus both Canada and Australia. This is while he entered a new position which saw him short the euro versus long Norway position on the back of Norwegian krone weakness.

For the three year period to the end of March, Owens returned 15.05% in euro terms on the GAM Star Discretionary FX EUR Acc share class of the fund, whist the average manager in the Alternative Ucits – Currency sector returned 0.06%.

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Head to Head

Pitting König and Owens against each other for their three year performance figures, it’s Owens that comes out ahead for his total returns. On this absolute basis, Owen returns more than double that of König over the past three years.

However, looking at maximum drawdowns and standard deviation, it’s König that has minimised risk as well as minimised losses during the three year period. Owens’ maximum drawdown over the period is quite high and most of that has come from the past year.

Investing in Owens does not come without potential pitfalls. His total returns may look appealing but he has taken a lot of risk compared to his peers to get there over the past three years, however, returns have been rewarding.

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Related Fund Managers

Adrian Owens
Adrian Owens
12/12 in Alternative UCITS - Currency (Performance over 3 years) Average Total Return: -14.23%
Andreas König
Andreas König
4/12 in Alternative UCITS - Currency (Performance over 3 years) Average Total Return: 2.46%
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