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Eaton Vance launches Currency Income Advantage Fund

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Eaton Vance Management has launched the Eaton Vance Currency Income Advantage Fund.

 
The new mutual fund seeks total return by investing at least 80 per cent of net assets in (i) income instruments denominated in foreign currencies and/or issued by foreign entities or sovereign nations, (ii) derivative instruments relating to foreign entities or sovereign nations and (iii) precious metals and commodities-related instruments. 
 
The fund expects to normally maintain foreign currency exposures across developed, emerging and frontier markets.   
 
The fund is the second Eaton Vance-sponsored currency income fund, joining Eaton Vance Diversified Currency Income Fund which was launched in 2007 and had net assets of approximately USD800m as of 31 July 2013.  Compared to Diversified Currency Fund, the fund seeks to earn higher income and total returns, with commensurately higher risk. 
 
"We believe investments in foreign currencies can provide investors with an attractive income stream and potentially reduce portfolio volatility and hedge against potential US price inflation," says Payson F Swaffield, chief income investment officer for Eaton Vance.
 
The fund is managed by a team led by Eric Stein, vice president and co-director of Eaton Vance’s global income group, Michael Cirami, vice president and co-director of Eaton Vance’s global income group, and John Baur, vice president of Eaton Vance and director of global portfolio analysis.
 
"We employ a macroeconomic and political research process to evaluate the relative attractiveness of countries and currencies," says Cirami. "We typically invest in countries where we deem the policy mix and economic environment as being supportive of long-term growth – these are the places we believe will attract capital investment and, thus, experience currency strength."
 
"We believe many investors in the US have little to no active foreign currency exposure within their portfolios, resulting in a nearly 100 per cent allocation to US dollar-denominated assets," says Stein. "Based on their historically low correlation to traditional stock and bond investments, allocating assets to foreign currency instruments can provide meaningful portfolio diversification and potentially lower overall portfolio volatility."

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