Neptune's Robin Geffen has predicted a further sharp fall in the value of sterling against the dollar as he positions his portfolio for a fresh surge in the US currency.
The chief executive and fund manager (pictured) said Neptune thinks US central bankers will tighten monetary policy ahead of their UK counterparts because they "are less constrained by the need to prop up the US housing market".
As a result, he expects sterling to weaken further against the dollar. The pound stood at $1.60 as of this morning, having fallen from a high of over $1.70 this summer.
"[This rate differential] leads us to forecast that the dollar could reach $1.50 to the pound," Geffen said.
Accordingly, close to half of Geffen's £500m Neptune Global Equity fund is in US equities.
He said: “We have believed throughout this year that the dollar would strengthen significantly against sterling and the yen, and have been positioned for this.
“This hurt us for the first half of 2014 as we waited for our forecast of Federal Reserve policy to play out. However, it is now providing an important boost to the portfolio.”
The US recovery is also benefiting from the strong foundation of a robust employment market, according to Geffen.
He said the fund will also benefit from the weakening yen against the dollar: “The fund has built a 34% position in Japan and we have also hedged our yen exposure to amplify the effect of the diverging policy stances.”
The Neptune Global Equity fund returned 23% over the three years to 3 November 2014, compared to an IMA Global sector average of 36.6%, according to FE. Over one year, however, it has returned 6.2% compared with a sector average 4.4%.
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