At the end of the day, while both currencies remain near multiyear lows, investors don’t necessarily need the currency to appreciate to capture attractive returns. As long as currencies don’t depreciate by 2%‒3% per year against the U.S. dollar, investors come out ahead. For European investors, in addition to much higher yields, both currencies remain in the lower third of their trading range against the euro. In our view, Australian and New Zealand debt appears attractively priced versus U.S. and European fixed income, due to higher yields and attractively priced currencies.
1Source: Bloomberg, as of 2/28/15.
2Source: Bloomberg, 3/6/15.
3Source: Reserve Bank of Australia, 3/3/15.
4Source: J.P. Morgan, as of 3/6/15.
5Source: Bloomberg, as of 3/6/15.
Important Risks Related to this Article
Investments focused in Australia and New Zealand are increasing the impact of events and developments associated with the regions, which can adversely affect performance.