PIMCO's Sundstrom: It is the first time in my career where FX has had such a deep impact on asset selection

Underweight European equities

Geraldine Sundstrom, managing director and manager of the €1.1bn GIS Dynamic Multi Asset fund at PIMCO, has said responding to the "cold currency war" is increasingly becoming a crucial part of her investment process, due to its impact on market performance.

The manager said the effect of globalisation and the low interest rate environment had increased currency volatility, meaning the wrong hedging decision could wipe out returns. She gave the example of the rally in the euro last year, which climbed from $1.05 to $1.20. This impacted exporters' profits and meant the Euro Stoxx 50 rose just 6.5% as a result, versus 19.4% for the S&P 500. "It is the first time in my career where FX has such a deep impact on asset selection," Sundstrom said. "It is impressive that Europe has had the best growth in two decades and the stockmarket has gone a...