Central-bank reserve shifts indicate the best foreign-exchange returns may be found by avoiding the “fading four” most-traded currencies in favor of the next tier, according to Samson Capital Advisors LLC.
Sweden’s krona and South Korean won, which have rallied 7.1 percent and 3.5 percent against the dollar in the past year, are among Samson’s mutual-fund holdings, which it said may benefit as central banks rebalance portfolios to better match the global economy. Among the most-traded currencies, the yen has weakened 14.2 percent versus the greenback and the pound has fallen 4.4 percent in the past 12 months, while the 17-nation euro has lost 0.3 percent.
“The overweight in central-bank reserves to what we’ll call the fading four, the U.S. dollar, the euro, yen and the pound, those overweights are historical artifacts,” Jonathan Lewis, chief investment officer in New York and a founder of Samson Capital, which oversees $7.3 billion, said March 6 in a telephone interview.
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