FX FX MANAGERS
to certain data-based rules. In recent
times it has become
particularly evident that anyone can make a comment and move markets, which
in a way may
“corrupt” the very data signals are extracted from.
In this
environment, HFT strategies find it more complicated to produce “alpha”. The market is always
changing and evolving
and HFT programs run the risk of being structurally late. By the time HFT managers have created a new algorithm, the market has changed again.
I also firmly believe that no matter how smart some of these guys are, when it comes to developing a system, market experience is what makes the difference. Experience will always prevail, so long as you know “how” to manage risk properly!
FXTM How does liquidity impact the efficiency of your strategies? Have you already explored to what AUM limit the strategies would allow you to grow to?
GO With our style of trading, I think even at $5bio in AUM we would be fine without much of a problem in terms of liquidity. For the time being, we have $2bio
68 FX TRADER MAGAZINE January - March 2014
as a benchmark that we’d like to reach over the next few years. We should be able to comfortably manage up to $1 bill with the current team as it is now, without any further additions. Above that level, I would consider bringing in additional members to our team and slowly integrate them within the existing structure. We have a shortlist of 20-25 good candidates in mind.
FXTM What
is the biggest strength of your team?
GO Our collective experience in the markets, both on the buy side as well as sell side of Institutional FX desks, and our ability to cohesively manage risk in a disciplined manner is an absolute strength.
FXTM Can you give us your feeling about the move of the EurUsd in the next 6/12 months?
GO With renewed optimism about US growth, the rest of world, and particularly the EU, have positive spillover effects. We have noticed a similar trend in the UK as well. Secondly, EU sovereign bond markets have recently stabilized.
Speculation of a deflationary environment has created renewed market interest in sovereign bonds supporting the currency for the medium term. Peripheral current account
surplus, along with
other core European countries, has improved drastically since the recession. The risks of a EU default and sovereign crisis having diminished, so market participants have
started
unwinding bearish positions. We have seen some short covering of peripheral bonds. Interestingly, the Euro as a currency is highly liquid and it has been used as proxy to short peripheral bonds during periods of crisis. Reduced risk of EU default has seen short covering of the Euro against the rest of the G10 block. The theme should continue going into 2014, and we see the pair trading at 1.3500+ for next 6-12 months. It is currently at 1.3595.
FXTM What’s the best advice you would give to traders who want to enter the FX fund management industry?
GO Remember what makes you a “fund manager”, stick to your strateg y, and don’t lose sight of risk management.
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