Multi Currency Portfolios All Making Profit

by | Dec 23, 2006 | Multi Currency Investing

Multi Currency Portfolios All Making Profit.

Multi currency portfolios we track are all making profit. Here is their two month performance.

Portfolio Two Month Appreciation Annual Appreciation Rate

Swiss Samba 3.18% 19.08%
Dollar Neutral 5.09% 30.54%
Emerging Market 5.91% 35.46%
Dollar Short 11.74% 70.44%
Green 27.70% 166.20%

The green portfolio is the leader, steaming ahead with a 27.7% rise in less than two months. Five of the 6 equities have risen. The only let down in that portfolio to date is Singapore water company Hyflux.

The interesting lesson we learn this month from the overall portfolios are how they can be dramatically affected by the currencies borrowed. Take the Swiss Samba and emerging market portfolios. They show how a rising loan cost can reduce profits. The Samba investments are up 7.94% but because the Latin investments are linked to the US dollar they suffer from a falling dollar and hence rising Swiss franc loan. The cost of the loan payoff has risen 4.75% to reduce that really great profit to just a great 3.18% two month profit.

The emerging markets portfolio is a totally different situation but suffering the same fate. The investments are up a phenomenal 10.72% in dollar terms during the two months. However the Czech koruna has strengthened so the loan cost has risen 4.80% to reduce this incredible profit to just a really great one.

Finally the US dollar short shows how good it can be when a borrowed currency falls. This portfolio is up 11.72% in just two months. About half that growth is due to the US dollar’s fall. So the high annual borrowing cost of the dollar becomes quite insignificant.

Until the next update in 2007, Merri and I wish you a Merry Christmas and Happy New Year!


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