Why investors may want to consider currencies
Dec 17, 2012 | Related Links Index Hidden Parent
The currency market never sleeps, trading 24 hours a day. Highly efficient and increasingly transparent, it offers investors the opportunity to benefit not only from an additional source of return but also from another means of diversifying their portfolios that may potentially reduce risk.
Currency investments offer two potential sources of income. The first comes from the “carry,” which is the difference between the interest rates of the two currencies transacted. The second arises from moves in exchange rates. These moves are driven by a range of factors, such as changes in relative interest rates, economic variables and geo-political events.
While many people believe that currencies are a more risky alternative to investing in equities and bonds, when bought without leverage, currencies may be the least volatile of the three. Ms. Yates also underlines the potential versatility of the asset class, commenting, “through the use of structuring, we are also able to offer investors the possibility to access currency market opportunities while protecting their initial investment.”