The K2 Chronical...

K2 has increased its AUD exposure

14 April 2015

By Mark Newman

K2 Asset Management Chief Investment Officer, Mark Newman has recently increased the AUD exposure across its International funds. The K2 Asian Funds AUD exposure is now 54%, K2 Select International Fund AUD exposure is 50% and the K2 Global Alpha fund AUD exposure is now 60%.  

Back in early 2011, K2 made its first move to start un-winding its currency hedge in its International products. Over the period to August 2014, the fund unwound its position in its entirety – the fund was 0% hedged, and benefitted from the fall in the AUD. Over the past 33 months, the AUD fell 25%. In the past 10 months alone, the AUD fell 17%, a fall the fund has significantly benefitted from.  

Over the past week or so, we feel that the time has come to start to increase our AUD exposure once again. There are a few reasons for this:

  • China’s actions to stimulate their economy, together with the likelihood of a more synchronized global economic expansion, we believe will ultimately result in commodity prices rising
  • Commodity, equity and currency markets can sometimes move 3 - 9 months ahead of when the underlying proof comes through
  • Over the past week or so, early signs of improvement in commodity prices, especially Oil, Iron ore have been seen – this is viewed as a positive for a higher AUD
  • Whilst a higher Federal deficit should be AUD negative, it needs to be seen in the light of where the rest of the world are in terms of their own deficits and GDP. On those comparisons – Australia doesn’t look bad. An easier fiscal stance in the May budget could be seen by currency markets as pro-growth, which is positive for interest rate structures and asset prices.

For these reasons, K2 (as of Monday 27th April) increased our AUD exposure. The K2 Asian fund AUD exposure is now 54%. The Global Alpha Fund AUD exposure is 60% and the K2 Select International Fund AUD exposure is now 50%.

K2 is cognisant of the fact that we have to make these calls on investors’ behalves. Currency calls are tough calls to make. We believe that we have added significant value to investors’ portfolios since inception, and that it is prudent to again make this call on investors’ behalves.


If you would like further information, or to discuss any aspect if the funds performance in greater detail – please do not hesitate to call a member of our distribution team on 03 9691 6111 or

DISCLAIMER: The information contained in this presentation is produced by K2 Asset Management Ltd (“K2”) in good faith, but does not constitute any representation or offer by K2. It is subject to change without notice, and is intended as general information only and is not complete or definitive. K2 does not accept any responsibility, and disclaims any liability whatsoever for loss caused to any party by reliance on the information in this presentation. Please note that past performance is not a guarantee of future performance. A product disclosure statement and additional information booklet or information memorandum or general information on the funds referred to in this presentation can be obtained at or by contacting K2. You should consider the product disclosure statement before making a decision to acquire an interest in the fund.

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