The Nomura C10 Fund follows a currency strategy designed to capture the return of currencies which are best positioned to benefit from Chinese growth and yuan appreciation based on investors’ exposure.
Developed by Nomura’s FX research and structuring teams, the dynamic, rules-based strategy takes long positions in 10 liquid currencies with the highest trade exposure to China as measured by the ratio of exports to China versus GDP.
The new fund is billed as providing smart exposure to Chinese economic growth as it avoids issues such as negative carry in the yuan. It does not exhibit the drawbacks of other China proxy investments such as commodities or Chinese equities, as it rebalances up or down the notional exposure to the currencies in order to target 5% volatility through a strict risk-management process.
The fund is denominated in euros, with dollar and sterling-hedged share classes available.
Jean-Philippe Royer, head of the Fixed Income Fund Solutions Group at Nomura, said: “Investors seeking to participate in the China growth story have, up until now, had little choice but to suffer from the usually high volatility and the lack of liquidity and transparency associated with exposure to China. The Nomura C10 Fund is a unique opportunity to harness China’s economic growth in a liquid, efficiently risk managed and Ucits compliant investment.”
