The Newscape Dynamic Rates and Currency Fund will invest in currencies and interest rates of the OECD countries, with daily liquidity and offer sterling, euro, US dollar and Swiss franc share classes.
The interest rate investments will be more tactical, looking for medium to long-term opportunities in money market and debt instruments.
Philippe Bonnefoy is Newscape’s chairman and chief investment officer and will be this Ucits fund’s lead manager. His strategy will be to take advantage of any mispricing as well as other trends created by market psychology, especially within currency markets.
He says: “Price anomalies often arise as participants react to political comments, economic data or the actions of monetary policy officials.”
His process uses the firm’s proprietary quantitative models to identify opportunities that have, as Bonnefoy describes, “the highest probability of generating excellent risk-adjusted return. The quantitative models identify trend, breakout, mean-reversion and general structural mispricing.”
He added: “The currency market offers an exciting investment proposition as the majority of participants are not profit seeking. Central banks, sovereign wealth reserve managers, financial institutions, importers, exporters and consumers primarily use the market to hedge or settle financial transactions. This creates many opportunities for those investors seeking to gain from these inefficiencies.”
Putting this launch in context, Stephen Decani, Newscape’s chief executive officer, said: “The currency market is the largest market in the world with daily turnover in excess of $5trn, more than five times the average daily volume of the US bond market or over 25 times the value of the average daily volume of the US equity market.”
This is the third Ucits launch from Newscape, and follows its Diversified Growth Fund launched at the end of October, a multi-asset, capital growth proposition investing largely in developed emerging market equities and bonds.
