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Carry Trade

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Wd40
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Carry Trade

Postby Wd40 » Sat, 25 May 2013 11:32 am

Hello Guys,

I have been hearing a lot about carry trade, that is borrowing in a depreciating/lower interest rate instrument and investing in higher yielding instrument. Wonder if anybody here has been doing it and have any ideas to share.

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Strong Eagle
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Postby Strong Eagle » Sat, 25 May 2013 10:39 pm

Those instruments are typically in different currencies. Works great until currency fluctuations wipe out all your profits.

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JR8
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Re: Carry Trade

Postby JR8 » Sun, 26 May 2013 9:47 pm

Wd40 wrote:Hello Guys,

I have been hearing a lot about carry trade, that is borrowing in a depreciating/lower interest rate instrument and investing in higher yielding instrument. Wonder if anybody here has been doing it and have any ideas to share.


Question seriously where you are reading these 'tips'. The carry-trade can be done by banks, by laying down $multi-millions, as one part of probably billions of wide market exposure.

You mister prata-wallah (no offense, but a relative term), have nil chance in hell of even getting a worthwhile sniff at 'The Carry Trade' even with a $million.

My tip: Love the boring yet reliable. Stick it in Tata or similar. 10 years down the line you'll be thanking me for that.... but I accept a youngster needs their initiation of fire (almost complete loss) before they realise they are not in fact some innate financial market guru...


p.s. If you're new to the market. Open a trading account where you can dummy-trade in a parallel sub-account. Do that with you pet ideas and strategies... you might find it quite enlightening.

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Postby Wd40 » Sun, 26 May 2013 10:12 pm

I am not reading any tips, its just that I follow financial news a bit and I hear terms like carry trade, quantitative easing etc and how low interest rates send lot of money towards Asia searching for yeilds. Carry trade term specifically I hear a lot about the Japanese yen, in the past. But now most western countries have japan like close to 0% interest rates.

I kind of figured out that you need to be a big fish to make use of these kind of arbitrage opportunities, but was just wondering if there is something small timers like me can do other than just putting money in equity funds and bond funds. I refuse to put money directly into equities, I just too bad at it :)

Also, If you think about it, investing in an Asian or Emerging market bond fund is already kind of a carry trade. You are getting higher yields than what Singapore bonds give you and these bond funds are SGD hedged to eliminate the currency risks. The only risk is that of bond yields rising and hence reducing the NAVs of the bond funds. The credit quality is not that much of an issue in case of the safer funds.

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Postby JR8 » Sun, 26 May 2013 10:39 pm

No, by definition no.

You 'Mr $10 investor' are not going to get the look-ins that Warren Buffet does. Meanwhile the multitudes will promise that you can.

But perhaps we better stick to some baseline of intelligent and mature investment advice here..

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Postby Strong Eagle » Mon, 27 May 2013 6:55 am

If you think you want to get into more exotic instruments, you could check this out: https://www.jackson.com/annuities/varia ... Access.jsp, where they sell "alternative investments".

They offer managed futures, commodities, global infrastructure, covered calls, metals, gold, real estate, currency, merger arbitrage, and listed private equity amongst others.

They offer managed funds or you can select where you might want to invest. It is set up as an annuity and has management fees.

Not recommending this, just noting that if you wish to participate, it is possible to do through a fund.


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