Why invest in the FX market?

WHY INVEST IN FX?

Neil Jamieson of ETF Securities, says foreign exchange has ‘all weather properties' and can generate returns when other asset classes are performing poorly.

We have witnessed some significant moves in foreign exchange markets in 2010, particularly in reaction to European sovereign debt issues. These events have brought foreign exchange into front page focus, yet it is an asset class that sits largely on the fringe of investor portfolios. This is surprising because there is considerable evidence to show that direct currency exposure can improve portfolio returns and provide a source of alpha distinct from equities and bonds. Currencies provide a relative return because when one currency is rising the other is falling.  This relative return...