Carry Trade Pits Value Dislocations In Emerging Markets Against Low Rate Developed Markets

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Mark Melin
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Carry Trade

The carry trade – borrowing in a low interest rate sovereign region and investing in a high interest rate regime – has been a stable of many hedge fund portfolios. A November 7 Deutsche Bank report titled “What drives excess returns on FX carry?” point to two factors that point to two factors that led to outperformance as a rotation out of developed markets and into emerging markets “has been the main driver of asset pricing this year,” a move that favors emerging market fixed income. Classic carry trade has low interest rate regime as the borrow side of the…

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Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.

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