SYZ Launches High-Yield Currency Fund

Oct 26 2010 | 1:15pm ET

Fresh from combining its asset management businesses, Swiss bank SYZ & CO has launched a high-yield currencies hedge fund.

The new UCITS III-compliant OYSTER ForExtra Yield EUR is actually a sub-fund of SYZ's OYSTER SICAV. The new vehicle is designed to profit from high interest rates paid by certain currencies while avoiding the main drawbacks of most foreign exchange funds.

The ForExtra sub-fund will invest in forward forex contracts for the five currencies SYZ believes have the best risk/return ration each month. The strategy, developed by SYZ chief economist Fabrizio Quirighetti, has been tested—successfully, according to the bank—for the last two years as part of a JPMorgan Chase structured product.

This month's currencies are the Brazilian real, Indian rupee, Polish złoty, South African rand and Turkish lira.

The fund has low correlation with traditional asset classes and uses no leverage, SYZ said. It is currently only available to institutional investors, but the firm plans to register it in a variety of European jurisdictions to make it available to retail investors.

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