JP Morgan Asset Management has launched the JPM Emerging Markets Currency Alpha Fund, which aims to deliver an annual return of 8% above cash in euro terms by exploiting opportunities in emerging market currencies. The Ucits III absolute return fund is managed by Amit Tanna and Harry Bazzaz.
“There is a structural case for investing in emerging markets, and currencies are a critical part of that equation. Domestic demand is likely to be an increasing contributor to growth and this is expected to continue to attract capital flows and enhance productivity. These trends will likely support EM currencies from a long-term structural perspective,” says Tanna.
“However, relative value ‘alpha’ opportunities are becoming a more important source of return and this is a key focus of the fund – with the majority of currency flows in emerging markets being non-profit motivated, inefficiencies arise and can provide real ‘alpha’ potential,” he adds.
The fund aims to take advantage of these inefficiencies and the significant divergences in emerging market countries such as their differing economic cycles, policy stances and valuations.
“Not all EM countries were created equal,” Tanna says. “Differences in fundamentals provide a significant opportunity to exploit relative value trends within emerging markets.”
The management team is supported globally by fourteen strategists and analysts, with on the ground presence in emerging countries such as Brazil, India and China providing key input into the research process. The investment framework uses proprietary quantitative and qualitative strategies in the construction of the portfolio.