Ezra Zask Expands After Joining Dean Witter Currency Fund Author: Source: FX Week | 29 Mar 1993 Categories: Trading, Risk Management Connecticut-based currency fund manager Ezra Zask Associates Inc. (EZA) is beefing up its operations. The current seven-strong team added one dealer in January and is looking to hire another trader as well as an analyst. EZA credits its conservative strategy of arbitrage plays and diversification, as well as its participation in the Dean Witter World Currency Fund L.P., for the staff additions. "Strong performance results over the past five months and the group's participation in Dean Witter's world currency fund have been a boon to our operation," says Ezra Zask, president. "So I feel we have sufficient business to warrant new traders." In January, Zask ranked as the top performer (with nearly double the returns of the nearest competitor), according to the Ferrell FX Index of 30 programs managed by 29 firms. "We made six percent in January," says Zask, "largely because we had the Irish punt in our hedge portfolio against long positions in Spanish peseta and French franc. So we caught the Irish punt devaluation head on." He continues: "In February, we were up [about three percent], in part because we shorted Swedish krona as part of the hedge against longer positions in French franc and Portuguese escudo. Again, when the Swedish krona devalued, we made some money." Two Percent a Month Zask says the group is currently up three percent so far in March. "Even if we did two percent every month all year, it would be great. We are a low volatility, low draw-down product. We don't look to make 100 percent like trendfollowers do, we look to make between 20 and 30 percent a year--and we look to keep draw-down below five to 10 percent," says Zask. By putting a twist on the old interbank game of high-yield plays, the Zask team has strayed from the typical cross plays, and is making its money by shorting the high-yielding currencies. "As part of our hedge in Europe, we have been shorting the Irish punt, Danish krone and Swedish krona. Normally, in our type of product, you would buy the high-yielding currency, short the lower yield, and hope for the interest-rate differential between them. But because of the instability in the ERM over the past few months, we've been making decent spot appreciation," says Zask. Zask and his team of currency dealers are also taking advantage of interest-rate plays and stability in the Asian markets. "We invested in a basket of Asian currencies--Malaysia, Indonesia, Thailand and New Zealand--which have all been exceptional performers. There has been steady interest rate pick-up on all of them, plus currency appreciation (especially Thailand and Malaysia) paid-off," says Zask. "Mexico has been an excellent performer as well--spot has been very steady, and interest rates run at 16 and 17 percent," adds Zask. Zask says his firm hasn't had any problems with liquidity in these markets, and even if a market does become illiquid, he says diversification keeps the manager from investing too much in any one position. Two-Fold Objectives Zask says the Dean Witter currency-only fund has exposed EZA to currency options and interest-rate plays--two areas in which he feels his company may be under-represented. "Our objectives are two-fold: to improve risk management and to add more diversification to our portfolio," he says. "Our trademark strategy of diversification and arbitrage is complemented by the addition of interest rates and currency options."
Zask says these additional products may help EZA to increase the number of positions it runs at any given time from ten to 13 or 14. Dean Witter Reynolds' currency-only fund was launched February 1 and closes April 1 (FX Week, December 21, 1992). The fund has four outside advisers that manage the fund--EZA, CCA Capital Management Inc., Colorado Commodities Management Corp. and Millburn Ridgefield Corp. The fund is slated to raise $60 million.
Source: http://www.fxweek.com/fx-week/news/1538727/ezra-zask-expands-after-joining-dean-wittercurrency-fund