Pictet emerging markets debt fund manager Simon Lue-Fong has switched to a bearish posture as risk aversion has set in on currency markets, according to the Financial Times.

The Pictet Funds Emerging Local Currency Debt fund, which fell by just 0.9 per cent in 2008 as markets plummeted, is now underweight most currencies after the market corrections since January, the publication said.

Mr Lue-Fong says: “Up to the end of January, we were pro-risk. We had a host of long foreign exchange positions around the globe, and we were pretty ‘flatish’ rates everywhere.”

“But a combination of events led us to be a bit cautious,” he said.

The “benchmark aware” fund aims to outperform the JP Morgan Government Bond Index – Emerging Markets Global Diversified by 1-3 percentage points a year, the publication said.

Over the last three years it has outperformed by 2.34 percentage points a year on average, notching up three-year growth of 39.12 per cent versus growth of 32.1 per cent on the index, according to the group.

Mr Lue-Fong, whose emerging debt team runs $6.5 billion (£4.2 billion, €4.8 billion) of assets at Pictet, says markets had a strong run leading up to the end of January, boosting the risk of a correction, while fears began mounting of monetary tightening in China.

The Luxembourg-domiciled fund is now underweight the Polish zloty, the euro, the Hungarian forint, the Taiwanese dollar and the Philippine peso. Mr Lue-Fong said: “Pretty much one of the only currencies we are still long on is the Brazilian real.”