Brian Singer

The Eurozone, which has been the very centre of political instability, is where growth is most likely to emerge in 2014 and, in terms of currency, the Indian Rupee will be the place to be, according to Brian Singer, Head of Dynamic Allocation Strategies at William Blair.

On a recent visit to Australia, Mr Singer said that the Eurozone is becoming increasingly more stable, which is conducive to growth. “There is more stability there now and there is likely to be more stability there in the future than the market appreciates and that’s all supportive of growth,” he said.

Mr Singer said William Blair’s Dynamic Allocation strategies are currently overweight Italy and Spain and has other exposures across the Eurozone, including the Dutch and German equity markets and very limited exposure in France. “Those are the primary exposures,” he said.  “The implementation comes through a combination of futures and ETFs.”

Still in Europe, on a sector basis, Mr Singer has a little bit of a leaning towards the financials and does not incur the exchange rate exposure. “We are actually short the Euro and Swiss franc as well,” he said. “We are doing that as a matter of saying we do want equities exposure but we don’t want exposure to the currency. Not only do we not want exposure to the currency, we do want to be short the currency.”

However, speaking of currencies, it’s a different story in Asia, where William Blair has recently taken a long position in the Indian rupee.

“The largest exposure we have in Asia is a long position in the Indian rupee,” Mr Singer said. “It’s not everybody’s cup of tea but it is cheaper now than since about 2007. The discrepancy between the Indian rupee and what we would say is its fundamental value increased to such a degree that we were more comfortable taking a position.”

In addition, Mr Singer said the interest rate differential in India began to move higher, creating a greater incentive to step into the currency. “When you are getting that type of carry in owning the Indian rupee on a forward basis and picking up that interest rate differential, it’s compelling,” he said.

Mr Singer discounted the panic that has occurred in the Indian rupee over the last couple of months as the market’s attempt to perceive what’s going on from the perspective of the experience of the 1998 Asian currency crisis.

“We simply don’t believe the environment is the same as that environment. We aren’t dealing with rates that are coming off, we aren’t dealing with exploding current account issues and challenged reserve situations,” he said. “The Indian current account deficit has been in place for years and the market has become aware of it this year – good for them, it provides us with an opportunity to focus on that and creates the opportunity.”

William Blair is currently short the Australian dollar.

William Blair launched an Australian and New Zealand presence, headed up by Australian executive, Alex Francois a year ago.

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