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Below is our recent interview with Thomas Suter, CEO of QCAM Currency Asset Management:
Q: At QCAM signs apparently point towards growth. What exactly is the role of Gary Klopfenstein, the latest addition to the team?
Thomas Suter: We are delighted to have Gary as a senior strategic advisor to the team. He is a pioneer in the specialist currency management industry and has wide ranging experiences in alternative investment management, having been a Senior Managing Director at Mesirow Financial in Chicago where he established the currency management practice and built it to over $50 billion in less than ten years. He is now Chairman of GK Investment Management LLC, a private investment company established as a family office and based in Chicago. Gary brings a wealth of experience on developing and refining investment strategy, scaling businesses and understanding institutional client needs and how best to meet those needs with innovative products and strategies. Also thanks to his network he has established over years Gary will give new impetus to our business development.
Q: Driven by the booming US economy, the global economy looked very promising but now shows signs of weakness. What is your assessment?
Thomas Suter: After a strong 2018 the US economy is expected to further weaken throughout 2019. The expiring stimulus of the tax package, rising interest rates and more volatile financial markets are creating significant headwinds. At the World Economic Forum in Davos last month also the business elite has given a very cautious outlook on the development of the global economy. We can expect increasing uncertainties in the markets.
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Q: How can investors defend themselves against these growing uncertainties?
Thomas Suter: Given the high and increasing hedging costs investors are faced with a fundamental challenge. Should they continue to hedge their assets against exchange rate fluctuations and if so, how can the high hedging costs be handled? One solution is a dynamic currency overlay which the one hand, hedges currency risk while seeking an additional return on the underlying currency risk. A bandwidth around the strategic hedge ratio is set and the responsible currency overlay manager applies the active currency strategy within the specified risk framework. At QCAM, we offer our customers tailor-made solutions for this effective strategy. Following a detailed risk analysis the implementation is carried out and constantly monitored to ensure compliance with specific risk parameters set by the client. Client reports evaluating the overlay performance are tailored to the client’s express needs.
Q: Are large cash holdings a recommended strategy in this environment?
Thomas Suter: It is a fact that institutional investors in particular – already lacking alternatives – sometimes have large foreign currency cash holdings languishing in banks at unattractive conditions. This solution may give the investor a sense of security, but the cost of missed opportunities is high, because inflation is eroding the value of that money year after year, especially now, in an era of negative real interest rates. With QCAM’s Optimized Liquidity Management these return potentials can be systematically exploited without increasing credit risk. In a multibank environment, the strategy is aimed at preserving capital and increasing returns. Portfolio Management strategically capitalizes on inefficiencies in currencies, currency forwards and the money market.
Q: QCAM is domiciled in Zug, the “Crypto Valley” of Switzerland. Your assessment?
Thomas Suter: A few months ago, I participated in an international expert roundtable on “Currency Trading & Crypto currencies”. My colleagues generally treat crypto currencies with respect but also with a healthy dose of skepticism. Personally, I place a big question mark on whether crypto currencies can even be described as true currencies. With traditional currencies, we know that a country or an economic bloc, with a gross national product and a web of economic and financial interrelationships, stands behind them. With crypto currencies, the question of their actual value is usually a bit more clouded.
Q: Your goals for 2019?
Thomas Suter: We plan to further expand our position as currency specialists in asset management. In doing so, we always act in the best interests of our clients and in accordance with our values of independence, transparency and integrity. We see those as our core attributes and we plan to build on them in the future.
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