During the financial crisis of 2008. Institutional investors discovered to their horror that many of the assets in their portfolios were far more correlated than they had thought. Since then a search has been under way for an asset class that can provide consistent returns while remaining uncorrelated with equities and bonds. In a 2012 paper called "A New Look at Currency Investing," Richard Levich, a finance professor at New York University's Leonard N. Stern School of Business, and Momtchil Pojarliev, a senior foreign exchange portfolio manager at New York-based investment firm Fischer Francis Trees & Watts, made the case for using forex to diversify portfolios and lower the risk of equity investing. "Foreign exchange risk is looked at as a toxic substance to be gotten rid of," Levich says. "Pojarliev and I are saying just the opposite: that currency offers an opportunity for rates of return that would also enhance the risk-return profile of institutional investors. It's an orphan asset class that is underutilized."
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