Fund That Bet on Euro Zone’s Demise Shuts After LossesBy
A Polish mutual fund created to profit from a potential collapse of the European Union’s single currency area has been shut due to poor returns.
Eurogeddon, as the fund was named, was the brain child of former Polish central bank Deputy Governor Krzysztof Rybinski and launched during the height of the European debt crisis in 2012. It closed with a five-year negative return of 56.4 percent, according to Piotr Swiecik, a board member at Warsaw-based mutual fund group Opera TFI, which managed it.
"The aim of the fund didn’t materialize," Swiecik told Bloomberg by phone. Opera plans to turn the fund into an all-shares product "with a completely new strategy," he said
The fund’s goal was to provide “asset safety and large profit in case of a crash” on European markets, according to Opera’s website. Its strategy was to bet against the euro and short stock indexes including Germany’s DAX, France’s CAC40 and Warsaw’s WIG20. It also took short positions on Italian bonds while investing in U.S. Treasuries.
EU-member Poland isn’t part of the euro area and the government doesn’t plan ditching the zloty in the foreseeable future. The open-ended sub-fund never gained much popularity, shutting with about 550,000 zloty ($156,000) in assets. Opera manages a total of 28 funds and sub-funds with about 2 billion zloty in assets, according to its website.