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Hasenstab on the big yen-dollar arbitrage opportunity
by Chris Sloley on Apr 24, 2014 at 14:49
On the defensive
Overall Hasenstab described his positioning as ‘very defensive’ with regards to the rising rates environment.
‘We are actively allocating across different currency markets to potentially generate positive returns in an environment where interest rates go up,’ he said.
‘We are looking for opportunities to earn a decent yield without taking a lot of interest rate risk. We think countries like South Korea and Mexico, with strong underlying fundamentals, are places that may offer a solid and positive real yield without taking a lot of interest rate exposure.’
South Korea is currently the largest country allocation in the Global Bond fund, making up 15.4% of geographic exposure, while Mexico is the fifth biggest country bet (10.7%).
The Templeton Global Bond fund has returned 12.6% in US dollar terms over the three years to the end of March 2014. This compares with a rise of 5.96% by its Citywire benchmark, the JP Morgan Global GBI Unhedged TR, over the same period.
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