Foreign-exchange funds gained 0.3 percent last month as a political impasse over the U.S. debt limit that led to a partial government shutdown affected returns, according to Parker Global Strategies LLC.
Among the 37 programs that reported results, performances ranged from a return of about 3.6 percent to a loss of 2.1 percent, the company said in a statement. Twenty-one funds gained money and 16 reported a loss in October, when Federal Reserve officials maintained their $85 billion-a-month bond-buying program, known as quantitative easing, while signaling they may taper “in coming months.”
“During the month, the U.S. budget negotiations and government shutdown broadly impacted global currency returns,” according to Parker, based in Stamford, Connecticut. “Looking ahead, the majority of the managers in the index agree that the major driver of currency returns will continue to be the Federal Reserve’s actions related to the quantitative-easing programs.”
The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, was little changed in October, and fell to 999.46 on Oct. 22, the lowest on a closing basis since Feb. 13.
Minutes of the Fed’s Oct. 29-30 meeting showed policymakers “generally expected” improvement in employment data that would “warrant trimming the pace of purchases in coming months.” The central bank will cut its purchases to $70 billion of Treasurys and mortgage-backed securities a month at its March meeting, according to the median estimate of 32 economists in a Bloomberg News survey conducted Nov. 8. The Fed next meets on Dec. 17-18.
The Parker FX Index is down 0.7 percent this year and has slipped 0.4 percent during the past 12 months. The index includes 39 programs managing about $42 billion by 34 firms worldwide.
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