Unlike conventional market wisdom, Tom Clarke, co-portfolio manager of the William Blair Macro Allocation Fund, sees investment opportunities in re-risking the portfolio by taking on the geopolitical risk of populist movements. In a recent interview with Citywire, Clarke discussed his top three currency calls in this environment.

“Broadly the opportunity is to be long emerging and short developed,” Clarke told Citywire. “I wish that was massively oversimplifying it, but it’s not.”

One exception to that view in currencies is the Fund’s British pound exposure. Before the Brexit vote in June 2016, the pound was overvalued, so the Fund was short.

After the pound dropped in value following the Brexit vote, the investment team moved its pound exposure to neutral before increasing it to long in September 2016. And as a result of the recent U.K. general election where the pro-Brexit Conservative party lost its majority, Clarke believes a “softer” Brexit will benefit the pound.

“The U.K. now has much less bargaining power than it once had, whereas the EU has more because of France, Holland, and the populist wave receding a little bit,” said Clarke.

The second currency Clarke mentioned to Citywire is the Mexican peso, which slumped in 2016 due to President Donald Trump’s rhetoric during the election campaign.

Clarke noted that the team cut the peso position heading into the election and were able to buy it later at a cheaper price. “That’s not something that’s easy to do,” Clarke said. “We cut it because the Trump risk was one we did not want to take. The opportunity [to buy back] got big enough so we responded.”

The Philippine peso is the third currency Clarke highlighted. The Philippines also have a a “maverick president who says what he likes and is a populist,” Clarke told Citywire, “[but] the regulatory institutions are of decent quality there.” He said that economic fundamentals, including the growth rate and inflation are also relatively positive.

He added that several emerging countries have experienced a spike in inflation after a sharp weakening in their currency. This increases the concern that “double digit inflation expectations get entrenched and go back to being the norm” but he thinks this is very unlikely in the Philippines. In response, the Fund has increased its position in the currency over the last few months.

Read Tom Clarke’s Full Citywire Interview

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling +1 800 742 7272. Read it carefully before you invest or send money. Investing includes the risk of loss.

Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2017 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

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Please carefully consider the Funds’ investment objective, risks, charges, and expenses before investing. This and other information is contained in the Funds’ prospectus, which you may obtain by calling +1 800 742 7272. Read it carefully before you invest or send money. Investing includes the risk of loss.

Any statements or opinions expressed are those of the author as of the date of publication, are subject to change without notice as economic and markets conditions dictate, and may not reflect the opinions of other investment teams within William Blair Investment Management, LLC or the Investment Management Division of William Blair & Company, L.L.C.

This content is for informational and educational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investment advice and recommendations can be provided only after careful consideration of an investor’s objectives, guidelines, and restrictions.

Factual information has been taken from sources we believe to be reliable, but its accuracy, completeness or interpretation cannot be guaranteed. Investments are subject to market risk. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be interpreted as investment advice, as an offer or solicitation, nor as the purchase or sale of any financial instrument. Statements concerning financial market trends are based on current market conditions, which will fluctuate.

William Blair does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax questions and concerns.

Distributed by William Blair & Company, L.L.C., member FINRA/SIPC.

Copyright © 2017 William Blair & Company, L.L.C. "William Blair” is a registered trademark of William Blair & Company, L.L.C. No part of this material may be reproduced in any form, or referred to in any other publication, without express written consent.

Statement of Financial Condition | NMS Rule 605 & 606 | Business Continuity Plan | UK Stewardship Code
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