"The long-term growth prospects of emerging markets means it is a sector that continues to attract a high level of interest from investors looking for exposure and access," said Nathan Bance, director of UK investor solutions at Barclays Capital.
"While traditional equity and bond funds continue to attract the lion’s share of assets we believe that the possible returns on offer through exposure to leading emerging market currencies, combined with the relatively low correlation they have with other asset classes, means investors should not ignore their potential."
Performance of fund vs sector over 3-yrs
Source: Financial Express Analytics
Barclays Gems, which focuses on 15 emerging market currencies, has delivered investors a return of 27 per cent since its launch in May 2008, with an average volatility of nine per cent, Financial Express data shows.
Its UM Currency Sterling sector returned 3.53 per cent.
"Our own research broadly expects emerging market countries to raise interest rates, which will in turn benefit the rate of interest generated from the Gems fund’s exposure," Bance explained.
"In addition, the fund is currently exposed to currencies which are trading at approximately a 50 per cent discount to purchasing power parity."
Bance believes emerging markets are creating a good environment for currency investors.
"Evidence suggests that as the wealth of a nation, and its citizens, increases, its currency becomes more closely priced to the dollar and therefore more expensive."
"Should this occur, the fund is well positioned to take advantage of this for the benefit of investors," he finished.