Multi Currency Portfolio Models

by | Aug 31, 2006 | Multi Currency Investing

Multi currency studies here look at five model multi currency portfolios (of $100,000 each). They continue to rise with the dollar long portfolio the only one of the five being in negative territory.

The Emerging Asian Portfolio is now up from + 68.9% at our last update August 10 to +84.18%.

(All the total performances here are from 10 months ago, October 2005 when we initiated this study).

The Emerging Market Portfolio has risen from its August 10 performance of +34.37% to +34.60%

The Dollar hedge and dollar short portfolios are back in the black as well.

The Dollar Short is up from -3.9% on August 10 to +1.49, the Dollar Hedge up from -4.5% to +1.43%.

The Dollar long is up from -6.4% but still in a slight loss position at -0.7%

If we look at all five portfolios as one with equal weightings at this update they have risen to an average of +24.72% per annum, slightly ahead of our projections.

Had we invested all $500,000 in the Asian portfolio (and leveraged two times) the investment would have returned $420,900 profit so far. Easy to say when looking back. On the other hand had we invested all in the dollar long portfolio the $500,000 would only be worth $496,840. a $3,160 loss.

What is also interesting is the most profitable investment in all five portfolios. With the Asian portfolio doing so well, one would assume it was the Chinese or Indian funds held.

Not true. The most profitable (in percentage terms) investment to date is the Jyske Invest Eastern European Equity Fund, up from $51,000 to $77,717.

That fund is up 41.34% in ten months. Had one invested $500,000 in this fund and leveraged the investment two times with a Swiss franc loan, the profit would be nearly $600,000!

This fund also has some room to grow as it has not fully recovered from the April 2006 downslaught in emerging markets. The fund was at 560 euros per share in March 2006, but dropped to 380 per share by the end of May. The fund has recovered to 520 Euros per share.

The fund is invested about 10% in Hungary , 15% in Poland , 10% in the Czech Republic and a whopping 50% in Russia . Who would have thought that one of the best investments in 2006 would be in Russian equities.

The manager’s Review and Outlook is:


The increasingly bullish mood of the equity markets in late June were soon changed when the situation in the Middle East escalated and Israel started a military intervention in Lebanon . The atmosphere changed when Bernanke, Chairman of the Fed, indicated that the period of interest rate hikes is over this time around. In Eastern Europe , Poland was the best performing market with an increase of 16.56%, followed by Hungary (9.83%), Russia (3.59%) and The Czech Republic (3,42%) in terms of EUR.

“In Hungary , the market was surprised by the higher-anticipated a by interest rate hike in July. According to the central bank governor, interest rate increase is the result of the recent fiscal policy package.

“Disagreement as regards Poland ’s ability to meet the EU budget convergence criteria (3% of GDP) in time was probably the main reason why the Minister of Finance was replaced in June.

“Once again, the credit rating agency Fitch upgraded its outlook on Russia . The state of Russia sold some of its holdings in the oil company Rosneft and thus drained the equity market of approx. USD 3bn.


”Following a somewhat turbulent period, the markets stabilised in July. We have not changed our long-term outlook for Eastern European equities, which we still think hold a potential.

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Until next update may all your sandwiches be delicious!