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Top forex mutual funds split on US dollar performance in 2014

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(Credit: Reuters) U.S. 100 dollar notes are seen at a bank in this picture illustration in Seoul September 20, 2011.US Dollar Notes
January 3
10:42 AM 2014

Two actively-managed US foreign-exchange mutual funds have managed to make a profit in 2013, according to a Bloomberg report. The funds have different views on how well the US dollar would be performing this year, the report said. This in turn had placed doubts on what the general market consensus is on the top currency.

John Hancock Funds foresee that dollar inflows will be aided by the improvement of the nation's economic growth and the heightened demand in US assets. Merk Investments LLC, on the other hand, believes that the US dollar will be weakened due to the continued easing and a new, accomodative Federal Reserve chief. Merk said the US dollar will be sliding to $1.50 per euro in 2014 in comparison to $1.3628 per euro today. Bloomberg's year-end consensus deduced that the US dollar will be much stronger at $1.28 per euro in 2014. John Hancock was said to be marginally more bullish on the euro against the greenback.

Two of the eight U.S. foreign-exchange mutual funds that are being monitored by the news agency only saw positive annual return due to the delayed tapering of the Fed's $85 billion monthly bond purchases, the highest currency volatility in over a year and an unexpected strength of the euro. Wall Street strategists had redoubled its recommendation for this year after wrongly calling that the dollar will gain against the euro in 2013.

Pasadena, California-based First Quadrant LP/USA partner and John Hancock Funds II Currency Strategies Fund manager Dori Levanoni said in a phone interview on December 31, "We see attraction for dollar-denominated portfolio assets, particularly equities. Economic growth and support for the economy is continuing to strengthen while inflation remains low, which is dollar-supportive."

The fund, which manages $1.33 billion in assets, posted 3% in gains last year, and has placed itself in the 90th percentile of funds monitored by Bloomberg.

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