The carry trade – borrowing in a low interest rate sovereign region and investing in a high interest rate regime – has been a stable of many hedge fund portfolios. A November 7 Deutsche Bank report titled “What drives excess returns on FX carry?” point to two factors that point to two factors that led to outperformance as a rotation out of developed markets and into emerging markets “has been the main driver of asset pricing this year,” a move that favors emerging market fixed income. Classic carry trade has low interest rate regime as the borrow side of the…
Carry Trade Pits Value Dislocations In Emerging Markets Against Low Rate Developed Markets
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.
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