Bloomberg News

Buy Risk in 2012, AllianceBernstein’s Martini Says

October 28, 2011

(Corrects Leinwand’s recommendation in fifth paragraph.)

Oct. 27 (Bloomberg) -- Investors should use the world’s four most-traded currencies to buy those of smaller developed- nations next year as those economies outperform their larger counterparts, AllianceBernstein LP’s Giulio Martini said.

As the U.S., Japan, the U.K. and the euro zone struggle to recover from the financial crisis, countries such as Sweden and Australia may provide better returns in 2012, Martini, chief investment officer for currency strategies in New York, said at FX11, a foreign-exchange conference hosted by Bloomberg LP in New York today.

“If you took the big four currencies and used them all as funding currencies against a long position in the countries that don’t have those problems, like the Scandinavians and commodity- producers in the developed world, that’s been a really sound strategy based on just simple fundamental economics,” he said.

Emerging markets may also provide better returns than the world’s biggest economies, said Ron DiRusso, head of investment research at FX Concepts Llc, the world’s largest currency hedge fund. He recommends shorting the euro and dollar to buy their higher-yielding counterparts.

Jason Leinwand, head of foreign-exchange trading and strategy at Metropolitan Life Insurance Inc.’s investments unit, said South Korea’s won will rally the most in 2012 as the nation’s growth outpaces that of other countries. DiRusso picked the renminbi and Martini said Brazil’s real would gain the most next year.

Australia’s dollar was the second-best performing currency against its U.S. counterpart after the yen last year as the Standard & Poor’s 500 Index posted its second year of gains following the 2008 financial crisis. The real was the top performer in 2009.

--Editor: Dave Liedtka

To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Erik Schatzker in New York at eschatzker@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net


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