Halister News

(Bloomberg) -- Investec Wealth & Investment favors gold over bonds in its currency hedging mix, mainly to guard against the risk of protectionism stemming from political developments in the U.S. and other countries.

• Gold is also a possible way to ensure against risk of central banks using so-called helicopter money as stimulus, which would be inflationary, head of fixed interest Darren Ruane says in a phone interview
• Investec Wealth added 3% to gold in balanced portfolios as an alternative FX play; increased gold exposure by selling international government bonds, interchanging one tail-risk hedge for another
  • Sees gold as a non-paper currency and real-value asset class priced in dollars
  • Also reduced hedge fund exposure following disappointing performance
• Ruane sees a lot of uncertainty over what a Trump presidency would mean for the U.S. and global economy
  • Possible trade barriers against China could lead to currency wars, the winner of which would probably be difficult to predict
• Investec Wealth is positive on USD; Fed seen as only major central bank positioned to raise rates
  • Portfolio running long JPY positions versus GBP through Japanese equities; sees yen as a risk-off trade
  • Also holds long Japanese equity position given potential for more BOJ monetary stimulus
  • GBP likely to underperform vs G-4 currencies over the next month if polls suggest close call on Brexit vote
  • EUR/USD may drop a further 5% this year even if Investec Wealth’s previous call for parity currently feels very far away
• NOTE: Investec W&I manages GBP26b, according to Ruane