Euro convergence trades could return to fashion
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Like mini-skirts and flared trousers, some fashions have a habit of coming back, even if never quite like the original. Could it be the turn again of euro convergence funds?
Such funds, enabling investors to buy into the bonds or shares of countries looking to join the European Union or euro zone, were some of the hottest trends around until the first throes of the credit crisis five years ago.
The euro debt crisis, however, saw that convergence concept rapidly discarded. According to fund tracker Lipper, dedicated European convergence funds dropped from a peak of $9 billion in 2007 to $1 billion last year.
But as the euro zone's future has become a little clearer, investors have become more enthusiastic about buying emerging European assets. So convergence fund managers may be tempted to remove the mothballs.
There is as yet no great rush. Indeed, JP Morgan Asset Management switched its European convergence equity fund to a Turkey fund just last month.
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